Alternative Investment Due Diligence: A Survey on Key Drivers for Manager Selection

Abstract

While investor surveys have been conducted by accounting firms, banks, and consultants to assess the choices for a specific alternative investment style, the general focus of these surveys has not been on the process of manager selection. What is missing from these surveys is how decisions are made. To fill that gap, we conducted an extensive survey of alternative investment investors and managers who are members of the Chartered Alternative Investment Analyst Association (CAIA) that focused on the alternative investment manager selection process. Our research surveyed investors and managers to gain insight on the key variables they employ to support manager selection and better understand how they conduct due diligence across alternative investments. Manager skill assessment for alternative investments is more difficult than selecting traditional investment managers and requires greater qualitative analysis of the philosophy, culture, and processes of the manager.