Nearly all potential investors 98% agree that checking a hedge fund managers credentials is an essential part of upfront due diligence, according to an investor survey released today.
Researchers at the Greenwich Roundtable and Quinnipiac University collaborated on the industrys first survey of the due diligence practices of hedge fund investors. Investors take the practice of due diligence seriously, according to the Survey of Due Diligence Practices Among Investors in Alternative Investments. In fact, 76% of those surveyed said they decided not to invest with a hedge fund manager based on the results of background checks. By contrast, only 50% of those surveyed said they independently confirm the value of a hedge funds portfolio with a prime broker or administrator as part of the decision-making process.
Despite the reliance on a formal due diligence process, 69% of those surveyed said intuition about a hedge fund manager has a very strong or strong influence on their investment decision.
The survey was sent in September to 370 members of the Greenwich Roundtable, a research and educational hedge fund organization; the majority of respondents were hedge fund-of-funds managers and family offices.