Report: HF Investors Stress Importance of Operational Due Diligence

Jul 02, 2013 –

Jing Chen


A new report from Deutsche Bank indicates that investors are putting greater emphasis on hedge fund operational due diligence.

80% of the respondents revealed in Deutsche Bank’s second annual operational due diligence survey that they have a dedicated ODD team, and which they also conduct an average of 50 manager reviews a year.

Nearly a quarter of those surveyed indicate that lack of independence governance would defer them from investing with a firm. Those respondents prefer at least three directors on a firm’s board, including two independent directors.

An additional finding is that investment in human capital and proper segregation of duties were ranked as the top two operational recommendations for emerging managers.

Deutsche polled 68 institutional investors, including public pension and endowments that represents a hedge fund allocation of $724 billion for the report.