AIMA launches hedge fund director DDQs
Published: 09 March 2016
The Alternative Investment Management Association (AIMA), the global representative body for alternative asset managers, today has launched a set of Due Diligence Questionnaires (DDQs) for hedge fund directors.
These are the first set of AIMA DDQs – questionnaire templates that fund managers and investors use during their due diligence processes - relating to fund directors. They were produced by a working group of more than 30 AIMA member firms who consulted with investment managers, investors, individual directors and professional director services firms globally during the drafting process.
There are three versions of the new DDQ - an Illustrative Questionnaire for the Due Diligence of Individual Hedge Fund Directors (Investor Version); an Illustrative Questionnaire for the Due Diligence of Individual Hedge Fund Directors (Manager Version); and an Illustrative Questionnaire for the Due Diligence of Hedge Fund Boards of Directors.
The investor version contains questions about the experience, background, capacity and independence of a director. It also poses a number of questions about the individual director’s relationship to the fund and the fund’s board of directors. The questionnaire is designed to be used by investors on its own or in conjunction with the DDQ for boards of directors.
The manager version is designed for investment managers seeking one or more new directors for a fund. It too contains questions about the experience, background, capacity and independence of a director and assumes the director has not yet joined the board.
The DDQ for fund boards focuses on the activities of the board as a whole and the board’s interactions with investment managers and service providers. It is designed to be completed by the board as a whole and signed off by a single authorised director.
The new DDQs are complemented by AIMA’s Fund Directors’ Guide, which was published last year.
AIMA CEO Jack Inglis said: “These DDQs should be of benefit to both investors and fund managers in establishing a standard set of questions to provide transparency around fund governance decisions.
“AIMA’s DDQs and templates have made an important contribution to the industry’s evolution as hedge funds have become more institutionalised and transparent. They are an important early step in the due diligence process, but by no means the last step. Investors use the information they get from the responses to these questions to develop areas of focus for further questions and discussion with managers and to cross-check information from other sources.”
Notes to Editors:
The full DDQs and Fund Directors’ Guide are only available to AIMA members.
The working group took inspiration for the questions from a large number of questionnaires that directors and director services firms had received over the years and questionnaires that various investors and fund of fund managers used for their own purposes. Working drafts were created from these sample questions and refined through various drafts reviewed by the working group. The aim was to end up with a thorough and well-balanced set of questions that would form the basis of a set of DDQs that would cover the needs of the vast majority. AIMA hopes that the DDQs will reduce the workload associated with creating and responding to multiple forms of questionnaire for investors, managers, directors and professional director services firms.