Best practics of operational due diligence on hedge funds including both quantitative and qualitative aspects.
Operational Due Diligence - The Quantitative Aspect
Operational hedge fund due diligence is often associated with a boring and time-consuming process of filling due diligence questionnaires - the routine that Institutional hedge fund investors have been doing for years. Though such qualitative due diligence obviously has its merits, skipping the quantitative part will likely lead to improper assessment of investment risks. On the one hand, quantitative due diligence can help valuating managers' skills and the quality of their investment strategies. On the other hand, quantitative due diligence can even exposure investment fraud, ponzi schemes or incorrect investment memorandum information.
ABC Quant offers a comprehensive operational due diligence framework, designed for alternative investments and incorporating both quantitative and qualitative aspects. That due diligence methodology has been constantly improving over the last 20 years, based on real-life assessments of hundreds of hedge fund managers. This tutorial explains the main phases of our due diligence methodology and guides you the workflow of due diligence on hedge funds using Risk Shell.
Quantitative Vs. Qualitative Due Diligence On Hedge Funds
- The pitfalls of the traditional due diligence approaches, the hedge fund prespective.
- Quantitative due diligence highlights:
- analyzing manager style drift;
- tail risk assessment;
- spotting illiquiid instruments in manager holdings;
- using multi-statistic peer group analysis to expose frudulent funds;
- Irregularities in market exposures and trading instruments.
Quantitative Due Diligence - Step-by-step Tutorial For Hedge Fund Investors
- Risk Shell software tools for operational quantitative due diligence on hedge funds.
- The suggested due diligence workflow.
- Synchronizing qualitative and quantitative due diligence, practical tips to improve efficiency and save time.
- Case study: how to expose a fraud in Madoff's funds within 5 min using Risk Shell tools.
Potential Audience
Institutional portfolio managers, hedge fund investors, hedge fund of funds and multi-asset portfolio managers, CIOs, advanced family offices, advisers, research houses, consultants, pension plans, endowments, family offices.
