Although outsized returns will always be the bedrock of an investment manager’s reputation, as consistency, reliability, and tangibility of returns are in the process of being established, I have seen GPs thrive due to a variety of other factors. “Transparency” and “mystique” are two such factors that have lofted managers to notable heights. Deciphering which of these LPs prefer is a tricky needle to thread because no investor would ever openly admit to knowingly investing in a GP that lacks transparency. Likewise, no investor will confess that the mystique of a manager was a significant part of the allure. Another interesting difference between the two factors is that, at least at the beginning stages of a GP/LP courtship, “transparency” is flaunted by most GPs as an innate trait, while “mystique” is a quality usually bestowed upon GPs by LPs. It would be bizarre to hear or see an investment manager proclaiming their own mysteriousness.
There are many occasions where I have seen “mystique” significantly overtake “transparency” as the primary descriptor of a GP. Of course, this phenomenon occurs after the GP has secured several big wins, and the GP/LP dynamic shifts from “LPs taking a chance on a GP” to “a proven GP now dictating who enters its fund and at what terms”. Below, I aim to unpack considerations related to transparency and mystique from a longevity (or sustainability) perspective.
Transparency
- Transparency is easily stated but also easily eroded: As previously mentioned, at the beginning of GP/LP relationships, transparency is hawked like hot cakes. At this stage, everything an LP demands is typically delivered with relative speed and efficiency. However, the transparency clock does not stop after the consummation (when an LP invests) of the relationship. So any change in the degree of visibility of GP affairs can quickly erode the initial goodwill. At the start of relationships, GPs should be cautious when expressing their level of transparency because any deviation from that will be perceived as negative by LPs.
- Transparency is multifaceted: Transparency is a multipronged concept. GPs cannot pick and choose what they want to be transparent about. For example, you cannot be transparent about the deal pipeline but unclear about the fee structure, or be upfront about the decision-making protocol but vague about personnel turnover. Transparency is an all-or-nothing game. A GP should never put its LPs in a position where they have to overthink which parts of the manager’s workings to trust and which to be skeptical about. Selective transparency never works.
- The way bad news is delivered is the ultimate test of transparency: In life, things always go wrong or take an unexpected turn. Almost every LP is keenly aware of the very real possibility that things might not go as planned. But it sometimes seems that GPs spend more time catastrophizing the outcome of delivering bad news rather than trusting that their LPs are mature investors who can face the truth directly. Even if the issue was avoidable or if, in hindsight, the fault clearly lies with the GP, most LPs would prefer to receive timely and transparent bad news with thoughtful reflection rather than slow, sugarcoated, and comforting information.
Mystique
- Mystique vanishes with the slightest fumble: GPs who base a large portion of their appeal on mystique should be wary of the fact that any misstep or unsavory occurrence can destroy all the perceived magical aura. Mystique is one of those things that is hard to quantify when it exists, but is also easily erased. Strong, consistent returns can feed into the “mystique” narrative, but once the trend line stops, even temporarily, trending upward and to the right, a GP might have to spend too much time reassuring LPs that the fundamentals still matter within their investment strategy. This might not be the most efficient use of time.
- Mystique not grounded in tangible attributes is mere hyperbole: Managers fortunate enough to conjure up a mystique that attracts investors and supports ongoing fundraising should ensure that behind that mystery, there is a clear set of principles and analytical rigor that justifies their appeal. This reminds me of the phrase “it takes ten years of hard work to become an overnight success”. Mystique can undoubtedly be a very positive thing, but in my view, it is a nice-to-have rather than a need-to-have. If factors such as hard work, extreme selectivity, operational skill, unique networks, and so on underpin a manager’s mystique, then aura becomes less of a crutch for existence and more of a helpful marketing tool.
- Mystique usually emanates from one person or a small group of people: A whole organization can exude mystique, but that mystique typically originates from its founder or a recognized rainmaker/s. An overreliance on mystique can aggravate “key person” risk to a higher degree than typically desired. Folkloric stories and mythic tales of exclusive deal procurements or nifty exits can make certain individuals legendary within an organization, but I firmly believe that such chronicles should not be relied upon when evaluating a manager.
Ultimately, both “transparency” and “mystique” shape the reputation and longevity of investment managers; yet proclaiming to embody either of these holds distinct risks and rewards. While transparency builds lasting trust, it demands ongoing consistency and openness. Mystique can spark initial excitement, but without substance, it quickly fades. The most resilient managers anchor their allure in honesty, competence, and genuine value creation for their investors.
Anthony Kwesi Hagan
Founder and Head of Research, FreedomizationTM
September 21st, 2025
