RT Journal Article
SR Electronic
T1 Structural Due Diligence, Operational Risks, and the Evaluation of Managed Account Platforms
JF The Journal of Alternative Investments
FD Institutional Investor Journals
SP 51
OP 67
DO 10.3905/jai.2021.1.149
VO 24
IS 3
A1 Ranjan Bhaduri
YR 2021
UL https://pm-research.com/content/24/3/51.abstract
AB The impact of the Great Financial Crisis on operational risk includes the birth of structural due diligence. Since the crisis, institutional investors have demanded more transparency and better governance in the hedge fund space. This demand has resulted in the growth of several different types of structures, including liquid alternatives via 40-ACT or UCITS funds, funds-of-one, managed accounts, and managed account platforms. Operational due diligence has extended beyond examining the noninvestment risks to include the best way structurally to access a specific hedge fund investment. The different structures have varying advantages and disadvantages, which translates to different types of operational risks. This article presents a matrix of the advantages and disadvantages of the structural forms and the concept of a structural alpha. The author examines managed account platforms (MAPs) and how to evaluate them.