Hedge Fund Question of the Week – Summer Edition – No. 8

Will the ODD process become more efficient from a manager’s perspective?

Answer:  Not likely.

The ODD process can vary greatly in terms of length and expense and may depend on the investor or firm conducting the review.  But some in the industry have noted what seems to be an ever expanding process, which requires progressively more resources.  Understandably no one conducting ODD wants to miss an issue that later leads to significant problems at a manager.  

So it might make sense for the industry to develop a more efficient approach to the ODD process.  For example, a higher degree of standardization might make sense.  Nevertheless, there does not seem to be any such movement at this time.  And because each investor and firm that conducts ODD has its own points of emphasis and views on the approach, managers can expect that the process will continue to require a significant amount of time and attention.