Fund Managers by Matthew Hudson

Author:Matthew Hudson
Language: eng
Format: epub
ISBN: 9781119515340
Publisher: Wiley
Published: 2019-10-14T00:00:00+00:00

Due Diligence

Once an investor has selected the manager that they wish to allocate to, they will perform due diligence (DD) to gather a level of detail which it would be overly onerous and impractical to receive during the manager selection process. This detail falls into three key areas: investment, operational, and legal. Due diligence can be done on each of these areas separately or in concert as required. As with manager selection there are obvious areas to enquire into and the investor can follow pro forma due diligence questionnaires, such as Institutional Limited Partners Association's (ILPA) due diligence questionnaire for investing with a PE manager, or AIMA's with a hedge manager. However, the concerns and requirements an investor has often require a bespoke approach and a more extensive back and forth with the manager.

Investment Due Diligence  This is the process of gathering information on a fund's current investment strategy and the investment methodology of the fund manager. Investors will need to look at and evaluate the market opportunity set as well as evaluate the manager's track record and performance on both an absolute and relative basis. Investment due diligence (IDD) will also evaluate a manager's risk management functions as well as their approach to portfolio construction and other factors, such as how a manager builds ESG considerations into their investment process.

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