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A Guide to Starting Your Hedge Fund by John Thompson, Erik Serrano Berntsen

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Appendix C

Sample Due Diligence Questionnaire Outline

Please find a sample DDQ outline below. DDQs are not sacrosanct and the below outline is not infallible either. It is provided solely as a reference and can be useful to the new hedge fund manager thinking about preparing a DDQ or a prospective hedge fund investor reviewing a DDQ.

Generally, most DDQs cover similar types of information though each will have its own flavour depending on the investment strategy, characteristics of the fund, and other similar factors. The DDQs created by the AIMA are generally considered industry standard and may be a good starting point as one thinks about creating a DDQ.13 Remember, however, DDQs are flexible and should be presented in a way that conveys the required information most effectively. For example, a DDQ can be one document or can be separated into individual documents based on topic.

Each fund should have its own DDQ and most of the information found in a DDQ should have significant overlap with information found in a fund's PPM. Additionally, potential hedge fund investors may have their own in-house DDQs that they prefer hedge funds to complete in order to focus on issues they have identified as important.

DDQ Outline

  1. Key Information on the Investment Management Group (IMG)
    1. Investment Manager/Investment Adviser
      1. Depending on the structure of a hedge fund, an IMG will include the Investment Manager (IM) and may also include an Investment Advisor (IA). For ease, and to avoid confusion, ...

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