A mandate defines the investment strategy, guidelines, risk tolerance, and constraints that a manager must follow when managing capital on behalf of an investor or allocator.
Mandates are formal agreements between allocators and managers, detailing permitted asset classes, leverage limits, benchmarks, drawdown thresholds, and liquidity terms. They serve as strategic roadmaps and compliance tools, guiding day-to-day investment decisions. Mandates often emerge during onboarding and are supported by documents like investor memos or factsheets. For GPs, adhering to mandates is critical to maintaining trust and avoiding breaches that could lead to redemptions or reputational damage. Mandates are frequently referenced alongside performance metrics and compliance frameworks.
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