Sire Management finds investor due diligence is still not up to scratch
Mon Sep 5, 2011
Some investors have failed to learn lessons about the subtle dangers of contractual obligations, says Donna Walker
As investors go direct hoping to save a few dollars on fees, one of the crucial aspects of professional hedge fund investing needs to be looked at more carefully. Donna Walker, a partner at Sire Management, an $500 million fund of funds in New York, is not convinced the lessons of 2008 have been learned, at least when it comes to certain aspects of due diligence.
Irrespective of the type of hedge fund investor, family office, funds of funds, or direct institutional allocators, legal documents are extremely important. “In times of stress some managers will use these documents against you,” warns Walker. Post-2008 it appears that many investors have not placed the same level of importance on reviewing partnership documents as other due diligence.
“When you sign documents you are entering into a contract that will govern the partnership,” says Walker. “Documents should be fair to both sides, and...
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