Transforming investor relations from reactive to proactive: With customised due diligence
Risk management is the cornerstone of due diligence. Investors perform due diligence on potential or existing funds and fund managers to minimize the potential financial risk, operational risk, and reputational risk to their business. These risks are becoming increasingly complex and difficult to manage, requiring investors to seek more information at an increased rate from their asset managers.
The due diligence process is an integral part of the investment process but not necessarily one that alternative managers relish. Standardized DDQs like those published by AIMA, ILPA and the PRI have been well received and provide useful intelligence into the type of questions that investors across the industry are asking. Managers that use these standardized DDQs as a basis to formulate responses accordingly will find that they are somewhat prepared to respond to
a wide variety of investor requests. However, most investors require additional information and files to supplement the standardized answers. These non-standard requests take up a large proportion of the managers’ time allocated for information requests, because they require internal experts to review the questions and provide new data points. These experts are better suited to drive the search for alpha but they are required to provide transparency for the end
investor. This is the dilemma; should the managers push back on the investors and risk impacting fundraising potential or should they utilize resources to provide more clarity and transparency?
In this article by our Founder and CEO, Wissem Souissi, published in the 2022 Q1 AIMA Journal, we outline how fund managers can use digital tools, like Dasseti, to create customized responses that help them stand out to investors in a crowded market.
Read the full article in the AIMA Journal here
