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Benedicte Gravrand, Opalesque London:

Some funds of hedge funds (FoHFs) and due diligence 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.

The events of 2008 and 2009 served to bolster the risks that many due diligence firms have warned about in the past. Many of the due diligence managers we spoke with cited investor concern over fraud as one of the drivers behind new business. However, they also cautioned investors not to lose sight of many other risks (not to ‘fight the last battle’ as one manager put it) and expressed ongoing concern with valuations processes, liquidity risks, and counterparty risks. They also stressed the importance of ongoing due diligence. One manager pointed out many hedge funds look very different in 2009 than they did in 2008 and solid, ongoing due diligence processes provide insight to some of the more intangible risks that exist – such as the way managers react during times of crisis.

Patric Wisard, partner at the Zurich-based firm aicons AG (www.aicons.ch), which provides investment/quantitative due diligence, operational due diligence and legal due diligence, spoke to Opalesque. aicons AG was founded in 2002 by Prof. Thomas Fischer and Patric Wisard, both former senior members of RMF Investment G......................

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