How do you evaluate a manager's readiness for policy changes? Why a proactive approach is so important in an uncertain policy environment
Policy uncertainty can create real challenges for investment portfolios. So how do you evaluate whether a private credit manager is prepared for policy changes before they happen?
Here's a practical example. During 2024, well before tariff policy came into clear focus, Fortress's asset managers reached out to borrowers, CEOs, CFOs, and sponsors to assess the inherent risks in their businesses. When tariffs became a primary concern, that groundwork meant investor questions could be answered quickly and with specific detail.
Watch to hear how Andy Frank, Global Head of Origination at Fortress, thinks about proactive risk assessment in practice.
Andy Frank:
We understand that policy uncertainty can create challenges in managing investment portfolios. The question is: how do you evaluate whether private credit managers are prepared for policy changes? How do you evaluate their approach to asset management? Let me walk you through a practical example of how Fortress thinks about this, because it goes to the heart of our aggressive approach to monitoring data and asset management.
During 2024, well before tariff policy came into clear focus, our asset managers formally reached out to borrowers, CEOs, CFOs, and sponsors to poll them on the inherent risks in their business. When the US Presidential election results came in, tariffs became a primary concern. Our investors had questions and we were able to quickly respond with specific details about our exposure. More importantly, understanding that exposure helped us think differently about new investment opportunities. Because we knew we had minimal exposure to tariffs, our scenario planning on trade policy was much easier to implement and much easier to adapt.
At Fortress, we take a proactive approach to asset management. This includes having a large, dedicated group solely focused on managing our existing risk on a daily basis. That not only gives us a better understanding of risk, it allows us to identify issues before they arise. It also allows us to play offense while others may be distracted with portfolio management.
Take another example. In 2020, during COVID, our army of asset managers got right to it, working with our borrowers, amending credit agreements, addressing risks, and offering expertise. This allowed the originations team at Fortress to be on the front line playing offense.
The team at Fortress has more than 20 years of experience in private credit. We know that it's not just managing credits after problems arise. It's about proactively analyzing potential risks across your portfolio so you can respond quickly with a playbook at hand.
