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Kirsten Bischoff, Opalesque New York:

Some funds of hedge funds (FoHFs) and due diligence (DD) providers have had to review their methodology since the beginning of the credit crunch and the subsequent uncovering of frauds such as Madoff’s. Opalesque spoke to several industry players about their approach. Our conversations are presented in a Q&A format – as are DD forms.

Most of the FoHFs interviewed for this series said they had not re-organised their DD resources – they had been doing it right all along - although one said that “meaningful evolutions were implemented in the second half of 2008.” Although no new risk areas have been introduced since last year, all managers tend to focus more on some areas of risk now. All admitted to having changed their manager selection criteria somewhat. None of them outsource their DD process but most use outsourcing services for background checks. They do not believe that managed account platforms are a panacea although they are divided about what they think these platforms do.

Chris Carsley is Senior Analyst and head of Operational Due Diligence and Neil Chelo is Director of Research at Tacoma, Washington-based fund of funds firm Benchmark Plus The firm manages a range of absolute return and portable alpha strategies.

1. Have you reorganized the due diligence resources within your company to address the increasing need for due diligence?

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