The beginning of the year is the time for investors to review how well their portfolios perform, and how successful fund managers were in managing the investments in the previous year.

In this article, we provide guidelines on what to ask and highlight the main evaluation areas to help create a complete and systematic fund manager annual review.

Before diving into the review, let us start with examining the key components of annually monitoring managers.

Key components of annually monitoring managers

There are two components to look at when conducting annual monitoring – performance and non-performance.

Performance components scrutinize a manager’s performance in relation to passive or public market benchmark, other managers involved in the same type of activities, and ensuing obstacles hindering performance.

Non-performance components include stepping down of key persons, change in ownership, reputational concerns, adherence to reporting commitments, consistency with agreed strategy, regulatory actions, as well as environmental, social and governance issues.

Now that we defined which performance and non-performance aspects should be the subject of investors’ attention, it is time to elaborate on what to ask in an investment manager annual review to get a comprehensive and accurate overview.

What to ask in an investment manager annual review?

Some key evaluation areas covered by the annual review of fund managers are the following:

  • General business updates
  • Staffing
  • Valuation
  • Financing and accounting
  • Tax
  • Legal, regulatory and compliance questions
  • Cyber security
  • Information technology

Each of these areas are complex, per se. Therefore, it is beneficial to have guidelines for composing a well-structured questionnaire which will result in a qualitative overview.

Fund manager general updates

Examines eventual changes in the firm’s structure or ownership, firm’s AUM, and insourced or outsourced business functions.


Reveals the number of staff in the investment and non-investment functions and possible departures of non-investment heads.


Examines if there have been material changes made to the valuation process and in the way the portfolio is valued (for example if the manager follows IPEV valuation guidelines).

Financing and accounting

Finding material changes in items like interest charged, average interest charged on committed/undrawn, drawn subscription lines for funds managed, changes in accounting systems being used, in roles and responsibilities and any delays/issues in NAV reporting to clients.


Tax-focused questions examine if the fund has been subjected to a tax audit, if the returns to the investor would be impacted because of legislative tax changes, or economic substance legislative changes.

Legal, regulatory, and compliance

Here are a couple of possible issues to explore – has the firm or its affiliates changed regulatory registrations over the covered period? For Private markets managers, has there been any regulatory reviews, as well as, making note of any terms of the LP agreement the GP has not complied with?  Its valuable to look at all the portfolio companies as well and consider the depth of the firms ESG policies.

IT, cybersecurity, and business (COVID-19 pandemic context)

Make sure to check if any of the portfolio companies or the manager has been subjected to a cyber security breach during the covered period.  We advise to check if the COVID-19 situation had a material impact on the firm’s operations or portfolio companies.

Is there any new vendors onboarded, what are results of recent penetration tests of phishing tests, any changes to IT infrastructure?


These were seven key areas of the annual fund manager evaluation. However, for better and more accurate insights into your fund manager’s annual performance, it’s good to look at the even wider picture.  At Diligend we help our customers implement best practices to make sure annual reviews yield the maximum insight for their business.


A broader approach to your fund manager performance review makes the evaluation more comprehensive and provides greater accuracy. Technology can make the whole process less time and resource consuming, allowing firms to focus on more on analyzing the information.

Diligend provides its users with a dedicated solution which, among many other features, enables institutional investors and financial consultants to digitize and automate annual fund manager reviews.  We don’t just digitize the data we help customers integrate this data into their systems, create a responsive due diligence process and create dynamic reporting.

Contact us via our contact form or by email to find out more how to customize and automate your investment manager’s annual evaluation.


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