Asset managers must invest in IR as due diligence requests rocket at large caps

Asset managers with growth ambitions need to invest in their investor relations function, according to a new white paper exploring asset manager views on the due diligence process.

Only 5 percent of managers with assets under management between $1 bn and $10 bn receive between 100 and 500 requests per year, according to DiligenceVault, a digital diligence platform for the asset management industry. That number jumps significantly to 46 percent for managers in the $10 bn-$50 bn range, however.

As investors request greater transparency, their custom due diligence questionnaire (DDQ) requests have increased, the results of the global firm’s 2022 survey finds. Nearly 70 percent of investors request custom DDQs and requests for information (RFIs) and/or send follow-ups.

ESG data collection is a clear priority and firms of all sizes and strategies continue to see higher volumes. More than three quarters (76 percent) of firms have seen an increase in ESG DDQs this year.

According to a separate 2022 buy-side survey conducted by Irwin, 89.5 percent of buy-side investors think issuers do not do enough due diligence to understand what investors are looking for before meeting with them.

DiligenceVault says larger and growing companies prioritize technology adoption to help navigate a complex fund-raising and investor engagement environment and deliver a sustainable competitive advantage for their firm. Two thirds (66 percent) of managers with assets under management greater than $100 bn use dedicated RFI/DDQ technology.

The firm surveyed more than 600 private equity, hedge fund and long-only fund managers over summer 2022 for its second year of analyzing industry perspectives.

Monel Amin, founder and CEO of DiligenceVault, says the insights help understand the asset manager’s experience, especially in an environment where there is a significant increase in complexity for the IR teams, with increasing volume, topics and frequency of due diligence.

‘They serve as an industry benchmark for formulating IR technology strategies in response to this rising complexity,’ she adds.