TY - JOUR T1 - Alternative Investment Due Diligence: A Survey on Key Drivers for Manager Selection JF - The Journal of Alternative Investments DO - 10.3905/jai.2021.1.147 SP - jai.2021.1.147 AU - Mark S. Rzepczynski AU - Keith Black Y1 - 2021/10/08 UR - https://pm-research.com/content/early/2021/10/08/jai.2021.1.147.abstract N2 - 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.Key Findings▪ Alternative investment manager selection is a complex process that relies on both quantitative and qualitative analysis that cannot be captured through specific empirical measures of skill. ▪ Qualitative factors for alternative manager skill assessment are equally or more important than the quantitative assessment of alternative managers. The operational due diligence of manager business risk can dominate or override assessment of investment skill and is critical to the manager selection process.▪ The manager selection process is tailored to the strategy being reviewed. Thus, the specific issues or factors involved with choosing a private equity manager are very different from factors associated with a systematic hedge fund manager. ER -