Decagon Advisors publishes new paper on emerging hedge fund manager due diligence

Decagon Advisors LLC released an alternative due diligence client briefing entitled "Emerging Manager Due Diligence Framework & Risk Comparisons." A copy is available at http://www.decagon-advisors.com/research/

As investment complexity grows and excess returns become harder to source, the Decagon team has found that investors are looking for innovative ways to efficiently assess emerging managers during the allocation process. In response to investor needs, the Decagon team has developed a framework, a Foundation Assessment, for evaluating the durability of an emerging manager. (Source). Hedge funds confront impact of financial market regulations and challenges of evolving prime broker relationships

Hedge fund managers are experiencing the ripple effects of new regulations on banks and prime brokers, with hedge funds facing increased trading fees and broader changes to business relationships. These dynamics place additional pressure on margins and are leading managers to seek new growth strategies, according to The evolving dynamics of the hedge fund industry, EY's 2015 Global Hedge Fund and Investor Survey.

Regulations such as Basel III and Dodd-Frank have caused banks and their prime brokerage businesses to focus more closely on liquidity, balance sheet capacity and funding, resulting in changing economics for fund managers who finance trades through prime brokers. 29% of respondents said their prime brokers increased fees in the past year, and an additional 22% expect an increase in fees ......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.