The Alternative Investment Management Association (AIMA), together with leading digital asset investors and industry experts, has published a new set of due diligence questionnaires (DDQs) for digital asset investment managers and funds (available for download here).
The release is timely given the increased scrutiny of the risks involved when allocating to digital assets and investors’ heightened demand for transparency. These DDQs have been primarily designed for investors to evaluate the unique investment and operational risks that come with allocating to digital asset investment funds. Theywill also assist investment managers in the space to meet investor demands for transparency more efficiently by creating a comprehensive standard template for information sharing. There are versions for open-ended funds as well as closed-end fund vehicles so that these templates can be used by hedge funds, venture capital and hybrid funds.
The questionnaires address: strategy, trading, risk management, leverage, liquidity risk, and fund service providers including custody, costs and expenses, performance and valuation.
These DDQs are the initiative of AIMA’s Digital Assets Working Group (AIMA DAWG) – a cross section of senior industry experts including investment managers, allocators, custodians, exchanges and other service providers. It is tasked with driving AIMA’s regulatory engagement, thought-leadership initiatives, and operational guidance in the area of digital assets.
AIMA’s CEO Jack Inglis said: “Events last year further demonstrated the need for digital asset investors to undertake significant due diligence processes prior to making an investment. Following the publication of our operational guidance on digital asset custody, this new set of due diligence questionnaires for digital asset investment managers and funds can help to standardise the due diligence process around this growing asset class. My thanks to all our members who contributed to producing this useful resource for the alternative investment community.”
Other DDQs that AIMA have created are used to assess investment managers, fund directors, fund administrators and cyber security vendors. AIMA’s first due diligence questionnaire for hedge funds was published in 1997.
Source: AIMA
