Due Diligence Flashcards
1
Q
What might a due diligence investigation into a hedge fund’s activity include?
A
Compliance with its prospectus - checks whether a fund is likely to meet their investment horizon, risk tolerances and investment strategy.
2
Q
What factors would a due diligence review of a US hedge fund include?
A
- Fund snapshot
- Disclosed investment strategy
- Historical returns
- Assets under management (copy of fund portfolio from custodian).
- Audited financial statements if regulated by the SEC
- Fund’s terms and details
- Regulatory registration, if any.
- Risk factors
- Valuation
3
Q
What human aspects can be included in a due diligence review?
A
Whether senior management are fit and proper:
- financially sound
- appropriately skilled, knowledgeable and experienced.
4
Q
Would outsourced functions and custodians also be included in due diligence reviews?
A
Yes
