The Alternative Investment Management Association (AIMA) has published a new edition of its flagship due diligence questionnaire (DDQ), 20 years after the first “AIMA DDQ” helped to standardise the due diligence process for alternative investment managers and investors.
The new AIMA Illustrative Questionnaire for the Due Diligence of Investment Managers will be used by investors assessing hedge fund, private credit and private equity managers. Completing the DDQ is generally regarded as one of the most significant steps that investment managers must complete before an investor decides whether to allocate to a fund.
The first AIMA DDQ, published in 1997, was mostly geared to managed futures funds and contained around 100 questions about the investment manager and the fund. Subsequent editions included more investment strategies, reflected changing business practices and took account of evolving regulations.
AIMA consulted with investment managers and investors while drawing up the new DDQ. For the first time, the questionnaire specifically covers private credit and private equity strategies as well as hedge funds. It also integrates the formerly separate DDQs specific to funds of funds managers and CTAs.
Expanded modules exploring the investment manager’s governance and operations and risk management processes reflect the substantially expanded due diligence process being undertaken by investors today. The DDQ’s modular functionality means that investment managers will be able to fill out only those sections that apply to their businesses and the specific types of products they are offering.
AIMA’s CEO Jack Inglis said: “The due diligence process has evolved significantly since the first AIMA DDQ was published in 1997. Ever more investors are undertaking significant due diligence processes prior to making an investment. Many alternative investment fund managers have transformed into diversified multi-strategy, multi-product firms seeking investments from a wide range of investors. These factors have created challenges for investment managers and for investors alike. Reacting to these pressures, AIMA has modernised its suite of DDQs, making them more flexible, easier to complete and more data-driven than before.”