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From Kirsten Bischoff, Opalesque New York:
Assets were redeemed from the hedge fund industry during late 2008 and early 2009 mainly for three reasons: investor liquidity needs, poor manager performance, and a general fear of fraud that has been coined “the Madoff effect”.
After the strong performance of 2009, many funds are now seeing early signs of interest on the part of investors looking to rebuild the alternatives portions of their portfolios. However, before investors are willing to re-enter the hedge fund space, they seem to have shored up their processes and procedures requirements and have unleashed a much more in depth due diligence process on the managers they are considering.
“The typical due diligence questionnaire has gotten longer,” Vernon Barback, president, chief operating officer, GlobeOp Financial Services told Opalesque New York during a recent interview.
Perhaps most noteworthy is the shift in what investors are now looking for as they evaluate managers. Barback says that whereas prior to the financial crisis, operational risk from an investor standpoint focused mainly on the valuations process employed by funds and their administrators. But, in current due diligence reviews, the chief focus of operational risk is a more fundamental question –how managers and administrators verify the existence of actual positions and assets.
This shifting focus has made itself apparent in i...................... To view our full article Click here
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