Operational Due Diligence of Hedge Funds: Evaluating The Risk of Fraud
(2019) BUSN79 20191Department of Business Administration
- Abstract
- Aim: The aim of the thesis is to examine whether the current operational due diligence process encapsulates the most significant factors to assess the risk of fraudulent behavior prior to investing in a hedge fund, and also to analyze how the due diligence should be performed if a hedge fund lack a long track-record.
Methodology: A qualitative multi-method approach was used. Discussions concerning the validity and the limitations of our choices and the collected data are held.
Framework: The conceptual framework entails background information concerning hedge funds and their strategies as well as a walk-through of the regulatory environment. Previous research regarding indicators of fraud in hedge funds and a section about... (More) - Aim: The aim of the thesis is to examine whether the current operational due diligence process encapsulates the most significant factors to assess the risk of fraudulent behavior prior to investing in a hedge fund, and also to analyze how the due diligence should be performed if a hedge fund lack a long track-record.
Methodology: A qualitative multi-method approach was used. Discussions concerning the validity and the limitations of our choices and the collected data are held.
Framework: The conceptual framework entails background information concerning hedge funds and their strategies as well as a walk-through of the regulatory environment. Previous research regarding indicators of fraud in hedge funds and a section about investments in hedge funds with a short track-record, is also covered.
Data: The data was collected from five due diligence questionnaires, four interviews with investments and hedge fund professionals, and four case studies of hedge funds that have committed fraud.
Conclusion: A thorough operational due diligence has the potential to avoid significant losses. Focus should be shifted more towards the managers of the hedge fund rather than the fund itself, opening up for the possibility to invest in young hedge funds without necessarily exposing investor to a higher risk of fraud. Nevertheless, the risk of fraud will always be a factor to which an investor can never fully avoid. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/8988457
- author
- Igerud, Stefan LU and Andersson, Robin LU
- supervisor
- organization
- course
- BUSN79 20191
- year
- 2019
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Hedge Fund, Fraud, Operational Risk, Institutional Investment, Short Track-record, Young Hedge Funds
- language
- English
- id
- 8988457
- date added to LUP
- 2019-09-30 14:10:33
- date last changed
- 2019-09-30 14:10:33
@misc{8988457,
abstract = {{Aim: The aim of the thesis is to examine whether the current operational due diligence process encapsulates the most significant factors to assess the risk of fraudulent behavior prior to investing in a hedge fund, and also to analyze how the due diligence should be performed if a hedge fund lack a long track-record.
Methodology: A qualitative multi-method approach was used. Discussions concerning the validity and the limitations of our choices and the collected data are held.
Framework: The conceptual framework entails background information concerning hedge funds and their strategies as well as a walk-through of the regulatory environment. Previous research regarding indicators of fraud in hedge funds and a section about investments in hedge funds with a short track-record, is also covered.
Data: The data was collected from five due diligence questionnaires, four interviews with investments and hedge fund professionals, and four case studies of hedge funds that have committed fraud.
Conclusion: A thorough operational due diligence has the potential to avoid significant losses. Focus should be shifted more towards the managers of the hedge fund rather than the fund itself, opening up for the possibility to invest in young hedge funds without necessarily exposing investor to a higher risk of fraud. Nevertheless, the risk of fraud will always be a factor to which an investor can never fully avoid.}},
author = {{Igerud, Stefan and Andersson, Robin}},
language = {{eng}},
note = {{Student Paper}},
title = {{Operational Due Diligence of Hedge Funds: Evaluating The Risk of Fraud}},
year = {{2019}},
}