Alternative Investment Due Diligence & Manager Selection

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Exclusive Report for CAIA Members

In late 2020, CAIA Association conducted an in-depth survey among our active Members that asked them to look past standard risk and return metrics and share their views on the drivers of manager selection. We hope that the survey results, along with additional resources from the CAIA community, will assist you as you engage in due diligence and manager selection.

In this report, Mark S. Rzepczynski, PhD, Founding Partner and CEO, AMPHI Research and Trading and Keith Black, PhD, CFA, CAIA, FDP explain the motivations of our recent survey, analyze the results, and share the most relevant lessons for our Members.

 

Key Findings:

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  • Qualitative factors are as important or more important than quantitative factors in alternative manager due diligence.
  • When asked specifically about predictability, respondents say that qualitative factors are most powerful. 
  • Skill assessment for alternative investment managers is considered more difficult than for traditional investment managers and requires greater analysis of the philosophy, culture, and processes of the manager.
  • The operational due diligence of manager business risk can dominate or override assessment of investment skill and is critical to the manager selection process.
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Video Link to Art of Due Diligence

The Art of Due Diligence: Exploring the Qualitative Aspects of Manager Research

A discussion of the survey results to better understand the qualitative factors of importance to LPs and GPs during the manager research process. Mark Rzepczynski, PhD, Keith Black, PhD, CFA, CAIA, FDP, and Aaron Filbeck, CFA, CAIA, CIPM, FDP discuss the survey results.

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Reflections on Non-Qualitative Drivers in Manager Due Diligence

From the results of our survey, we compiled a selection of findings into an eBook to give professionals the perspective of our CAIA Members.

"Reflections on Non-Quantitative Drivers in Manager Due Diligence" shares our key takeaways from Member insights and the findings translated into questions for self-examination to help investors reflect upon and improve the due diligence processes at their firms. 

Click here to access a download of your free copy (Members login, non-Members provide brief info)

ADDITIONAL RESOURCES

Analysis of Survey Results on AllAboutAlpha

CAIA Curriculum on Due Diligence & Manager Selection

Related Content from CAIA Publications and Other Sources