Due Diligence Comes To The Fore For Euro. Hedge Investors

Oct 30 2012 | 3:41pm ET

The most important investors in hedge funds can't get enough of due diligence.

European institutions are overwhelmingly focused on due diligence, according to a Deutsche Bank survey. Two-thirds say they take between three and six months to do due diligence on a manager, twice as long as the process took nine years ago. And the businesses that serve institutions, consultants and funds of funds, are responding: 80% of the former and 73% of the latter now have dedicated due-diligence teams in place.

"Institutions have embraced hedge funds as a source of positive, risk-adjusted returns, and this runs hand-in-hand with a greater focus on control and compliance," Deutsche Bank's European prime brokerage chief, Daniel Caplan, said.

"Investors have a rigorous toolkit of evaluation techniques and hedge funds have responded by vastly increasing transparency and access."

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