A top 10 checklist for alternative asset investors: Madoff Securities, a predictable catastrophe

Alternative asset investors, particularly hedge fund investors, must remember that investment performance of an asset manager should never be the sole or even primary consideration when making an investment decision. In fact, during recent years, qualitative factors have been the root cause of failure for nearly half of all hedge funds that have experienced forced liquidations.

In evaluating alternative investment managers, prospective and existing investors must consider the overall due diligence process as an integrated three-ponged approach in which risk-reward analysis is combined with investment thesis review as well as operational due diligence. This paper, by Ennis Knupp & Associates, provides investors with a top10 list of critical questions to ask when assessing hedge fund managers.