Practical Operational Due Diligence on Hedge Funds is an encyclopaedic, comprehensive reference, written from the perspective of an experienced practitioner. Accompanied by a useful archive of factual material on different hedge fund issues, including failures, fines, and closures, this book focuses on the areas due diligence professionals should address, and explains why they're important. Extensive discussion of publicised cases identifies the manager entities and actual fund vehicles involved, and provides commentary on what could have been done differently in each case, backed by actual regulatory materials, such as SEC complaints, that recreate the events that took place. Readers gain a deeper understanding of the many facets of due diligence and the many possible pitfalls, learning how standardise processes and avoid major errors and oversights.

The amount of money managed by hedge funds has almost doubled from the $1 trillion under management at the time of the financial crisis. Hedge funds can be extremely risky, but can be extremely profitable - as money increasingly flows back in, due diligence on these alternative investments becomes more and more critical. This book provides complete guidance toward the due diligence process, with plentiful real-world examples.

• Identify the areas of due diligence and what can go wrong
• Create procedures and checklists to minimise errors
• Learn what publicised cases could have done differently
• Gain a deeper understanding of massive failures and successes

Proper due diligence can be a massive undertaking, but thoroughness is essential when the price of failure is so high. Practical Operational Due Diligence on Hedge Funds provides the details professionals need to be on point every time.

Hedge funds promise much, but also present considerable investment and operational risks - especially if the due diligence performed is inadequate. Although many claim to do detailed due diligence it can potentially be flawed, look at the wrong information and evidence, be deficient in some respects or, in some cases, be entirely absent. Operational risk on hedge funds is considered by many to be a major factor in assessing their viability and success and that is why operational due diligence is an important process in the selection and monitoring of hedge fund investments by investors. Whether the issues to consider are operational problems, inadequate infrastructure, documentation, poor service providers, inexperienced staff, remuneration issues, or simply denial, an investment decision with inadequate operational due diligence can potentially go very quickly from being unremarkable to catastrophic.

Practical Operational Due Diligence on Hedge Funds by Rajiv Jaitly is a comprehensive guide on how to perform operational due diligence on fund structures and their investment managers, helping to make better investment choices and decisions and avoid potential disaster. Throughout, the author explains what to focus on and why, what red flags to watch, and what lessons might be drawn from the experiences of investors in hedge funds and points to negotiate on.

This book includes a library of 300+ detailed case studies of issues on hedge funds going back to situations with the earliest hedge funds in the 1970's right up to 2012. Nothing is more enlightening and valuable than these actual case studies making up more than half of the book. Each case study walks the reader through the financial and other predicaments faced by investors and investment managers, the decisions that were made and the outcomes that resulted. Each case is then analysed in depth, demarcating key issues and highlighting key lessons to be taken away in order to avoid repeating the mistakes of others.

Although the book is written with the due diligence professional in mind, it will be of interest to anyone making investment decisions that involve hedge funds or any other type of fund. It will also be of interest to investment managers and service providers in providing an insight into how they can improve their investment offerings to investors.

It offers a wealth of tools and techniques that aid the practitioner in performing due diligence with the level of care that is required given the amounts often at stake. Critical issues covered include:

• Establishing the existence of adequate controls in the operations of an investment manager
• Understanding the operation of leverage and related risks
• Scoring risks on a hedge fund
• Managing risks of conducting due diligence
• Negotiating terms of investment
• Checklists
• Guidelines for non-executive boards to review risk
• Rational for different fund structures
• Regulatory enforcement actions

If you are performing due diligence or making investment decisions involving hedge funds this is a book that you cannot afford to be without.