In a crowded and competitive alternative fund environment, institutional investors today can afford to be extremely selective. They are allocating to funds that not only deliver consistently strong performance, but that can also demonstrate excellence in operational risk management and treasury operations. This reflects a change in allocators’ approach to investing over the last decade. Beyond an emphasis on returns, issues rarely discussed prior to 2008 – concentration risk, counterparty exposure, fee transparency, borrowing costs, margin requirements and other concerns – are now integral to investor due diligence and ongoing manager scrutiny.
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