Hedge fund investors take the practice of due diligence seriously, according to a new survey released March 6.
The survey reflects actual investor behavior, said Steve McMenamin, executive director of the Greenwich Roundtable, in a news release accompanying the report, Survey of Due Diligence Practices Among Investors in Alternative Investments.
Researchers at the Greenwich, Conn.-based research and educational hedge fund organization and Quinnipiac University, Hamden, Conn., collaborated on the survey, the industry's first of the due diligence practices of hedge fund investors. The survey was sent in September to 370 members of the Greenwich Roundtable, and the majority of respondents were hedge fund-of-funds managers and family offices.
The survey found that most investors follow generally consistent set of practices, but modify approaches based on affiliation, assets under management ... and strategy, according to the survey. Nearly 68% said they almost always use a formal due diligence process in making investment decisions, rather than resorting to more informal evaluation.
Interestingly, despite the reliance on a formal due diligence process, a majority (69%) of those surveyed said intuition about a hedge fund manager has a very strong or strong influence on their investment decision.
Contact Christine Williamson at [email protected]