Mandate

A mandate is a formal agreement outlining how a manager must invest capital, specifying strategy, risk limits, and constraints for each investor.

What Is a Mandate?

A mandate is a formal agreement between an allocator (such as an investor or institution) and a fund manager, detailing the investment strategy, risk tolerance, and specific guidelines the manager must follow when managing the investor’s capital. It serves as a strategic blueprint, ensuring the manager’s decisions align with the investor’s objectives, risk profile, and any restrictions.

How Does a Mandate Work?

Mandates are customized to each investor’s needs and typically include:

  • Permitted asset classes: Which types of assets the manager can invest in

  • Leverage limits: Maximum allowable borrowing or risk exposure

  • Benchmarks: Performance standards for measuring success

  • Drawdown thresholds: Limits on acceptable losses

  • Liquidity terms: Rules for how quickly assets can be bought or sold

Mandates are established during onboarding and are often supported by documents like investor memorandums or factsheets. For pooled funds, each product has its own mandate, guiding the manager’s day-to-day investment decisions and ensuring alignment with investor goals.

Why Are Mandates Important?

Mandates are critical because they:

  • Provide clarity and structure for both manager and investor

  • Protect investor interests by setting clear boundaries and expectations

  • Foster transparency and accountability in fund management

  • Help avoid breaches that could lead to redemptions or reputational damage

Example: Mandate in Practice

An investor seeking capital preservation might set a mandate that restricts investments to government bonds and cash, with no equities or high-yield debt allowed. Another investor focused on growth may allow a broader asset mix and higher risk tolerance.

Types of Mandates

  • Capital preservation: Focuses on safety and minimal risk

  • Growth: Seeks higher returns, accepting more risk

  • Balanced: Mixes growth and safety

  • Thematic or ESG: Specifies sectors, regions, or ethical guidelines

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Let’s explore what’s possible, together.

Whether you’re allocating capital or managing it — we’re here to help you move forward with clarity and confidence.

Let’s explore what’s possible, together.

Whether you’re allocating capital or managing it — we’re here to help you move forward with clarity and confidence.

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Curated access to exceptional investment strategies, built on trust and long-term alignment.

© 2022–2025

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Investing in alternative strategies involves risk. Past performance is not indicative of future results. The value of investments can go down as well as up, and you may not get back the amount originally invested. These opportunities are intended for sophisticated or qualified investors who understand the risks involved. Please seek independent financial advice before making any investment decisions.

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Curated access to exceptional investment strategies, built on trust and long-term alignment.

© 2022–2025

Confluence Group

Investing in alternative strategies involves risk. Past performance is not indicative of future results. The value of investments can go down as well as up, and you may not get back the amount originally invested. These opportunities are intended for sophisticated or qualified investors who understand the risks involved. Please seek independent financial advice before making any investment decisions.

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