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What type of due diligence should I do on a fund manager before I invest in a hedge fund?
Asked by John Hutter






Answer By Julie Scuderi

Performing due diligence on a fund manager is extremely important in today's industry. Everyday, we read about some manager somewhere defrauding investors out of millions of dollars. Or, a manager may bend the truth a little on his past experience or performance statistics. Unfortunately, if a hedge fund fails, many times the manager can just close up shop and open up an entirely new fund and the investors will have no clue as to his past. Either way, a background check can alert investors of possible red flags. Many companies specialize in doing background reports and due diligence.


Answer By John Schrier

If you don't know the answer to this question, you shouldn't invest in a hedge fund. Or you should hire someone who knows the answer. Here's a decent link to at least one laundry list of information that should be sought - but a professional should be engaged to handicap the responses provided by the manager, and to plan follow-up questions.


Answer By John Schrier

If you don't know the answer to this question, you shouldn't invest in a hedge fund. Or you should hire someone who knows the answer. Here's a decent link to at least one laundry list of information that should be sought - but a professional should be engaged to handicap the responses provided by the manager, and to plan follow-up questions.

http://www.hedgefund.net/dd_index.php3#ddg7