Championships, Like Alpha, Are Team Wins

The last time the New York Knicks won the NBA title, I wasn’t born. The last time they were in the NBA finals was last century. So, like many long-suffering Knicks fans, I’ve learned to approach optimism with caution.

But the NBA Championship is now back at Madison Square Garden, I’m elated, and so I’ve decided to shoehorn a sports analogy into this blog article about the alternative investment market; here goes.

When the Knicks sealed the championship, the media will write about the MVP, who got the most points, assists, blocks, etc. Just like the portfolio manager gets the plaudits when their investment strategy delivers stellar returns.

But points and assists in team sports and IRR and returns in private markets investing are outcomes, not inputs. What ultimately sustains performance over time is everything happening beneath the surface.

For a team to perform consistently in a championship series, you obviously need talent, but systems must be in place as well. Roles need to be clearly defined. Players have to trust that the person next to them will execute in the big moments and (seemingly) small ones (Nick Saban famously said that he coaches his players to just focus on one play at a time and then the results will follow).

But the one play at a time philosophy, while executed by the players, is supported by an (almost) invisible infrastructure: coaching staff, analysts, medical teams, video coordinators. None of them will hit the game-winning shot, but without them, it probably doesn’t happen.

The same dynamic exists within the investment management industry.

From the outside, performance can look like a function of investment acumen alone. But those who operate within the industry know better. Consistent performance is built on a foundation of operational integrity, such as accurate reporting, robust controls, timely NAV calculations, and seamless investor communications.

One of the things that stands out watching this Knicks team is how coherent everything feels. I actually do know a bit about basketball, and I do see a clarity in how they play that allows the headline talent to focus on execution.

In our world, the equivalent is an operating model that allows investment teams to stay focused on what they do best, with confidence that the underlying infrastructure is solid. When that foundation is in place, decision-making improves, time horizons can lengthen and crucially, investors notice.

While many sports fans gravitate toward star players, long-term investors tend to look beyond headline performance at the investment process – how repeatable it is, whether the drivers of returns are more market-based than manager-based. They want consistency, transparency, and trust.

It’s really hard to earn that trust, and really easy to lose it: we all likely know of a situation where operational cracks begin to show because the symptoms are obvious: delays in reporting, discrepancies in data, lack of clarity in communications. While these can seem manageable, over time, they erode confidence in the same way missed assignments can unravel even the most talented team.

There’s also something to be said about resilience. In any Finals series, there are momentum swings. Runs, counter-runs, adjustments. The teams that succeed are rarely those that avoid adversity altogether, but those that respond to it most effectively.

I would not be surprised to see a sports analyst framing the Knicks win as a breakthrough moment; a culmination of the realisation of (admittedly, significant) talent.

While true, it’s equally a reflection of something less visible: a system that works, a group aligned around it, and an infrastructure that enables performance rather than reacting to it.

For those of us who spend our time thinking about fund operations, that’s a familiar blueprint.

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Anthony D. Mascia is Managing Partner at EFSI. Drop him a note to connect here.

EFSI is an independently owned, SOC-1 compliant, full-service fund administration firm. We provide accounting, reporting, administrative, and capital introduction services to a wide range of alternative investment funds including hedge funds, funds of funds, private equity funds, real estate funds, venture capital funds, and family offices. The center of EFSI’s service incorporates resilient technology and accomplished staff, providing clients a tailor-made service with exhaustive transparency. Give us a call today or reach out to our support team online. We look forward to hearing from you soon.