Hedge Fund Due Diligence And Its Limitations

In a world where machines learning to create investment strategies is colliding with fundamental portfolio management, today’s algorithmically-minded investment managers go about their jobs in very different ways. One of the methods to mine alpha is to dig deep into niche markets. For a hedge fund allocator, such adventure can involve enhanced risk – particularly with smaller managers with exposure to exotic and sometimes illiquid markets. For many such investors, the reward can be meaningful when the focus is on risk management and ongoing monitoring in addition to manager selection. [klarman] Position level transparency important, mainly when investing in smaller…