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Alternative Market Briefing

For hedge funds, longer due diligence periods can mean marketing through up and down performance cycles

Friday, April 29, 2011

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Lisa Vioni
From Kirsten Bischoff, Opalesque New York:

As the asset raising environment begins to ease, investors that are evaluating hedge fund managers for allocations have begun to place a much higher value on the quality of a manager’s business acumen. "In terms of investors’ willingness to start looking at hedge funds again, post Madoff and post financial crisis, it seems as though asset raising opportunities for managers are re-opening. However, investors are digging deeper and identifying new ways to perform due diligence," says Lisa Vioni, CEO and Founder of marketing platform Hedge Connection.

While assets have begun to flow back into the industry, the due diligence process is longer than it was prior to the financial crisis. Vioni believes this development can be attributed to investors’ determination to evaluate how well a manager runs the business side of the hedge fund, in addition to analyzing fund performance.

The due diligence focus has led many funds to make changes such as incorporating third party administrators into their operations, even at what is sometimes significant expense (for smaller funds especially), because investors have made it clear that by and large they will not invest in managers who do not use third party administrators. Best practices such as these are being implemented across the board in areas such as operations and investor relations and are a fund’s be......................

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