Due diligence has a data problem. And we don't mean there's too little of it—there's way too much emphasis on it. AUM, Sharpe ratios, standard deviation, five-year track records: allocators can build a spreadsheet that tells them almost everything about a fund's numbers. What it can't tell them, though? Who is running the money, and whether that person will still be answering the phone when markets get ugly.
That's the part most fund managers never address, and it's not because they don't know the answers. It's because nobody asked them the questions.
Our founder, Stacy Havener, put together 10 of those questions (but they're not the type you'll find on a DDQ.) They're the questions that separate a fund manager who can recite their strategy from one who can tell you, plainly, why they exist and who they're willing to disappoint to stay true to it.
Here are the 10 questions to sit with and think about before your next pitch:
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The world needs another [fund or insert what you do] because [____].
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Our peers believe [this], and we don't. We believe [this instead]. Here's why [_____].
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Our peers do [this], and we don't. We do (this instead). Here's why [_____].
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Our strategy works well [in this environment].
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Our strategy is challenged [in this environment].
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Our best clients tell us [_____]. It makes us proud because [_____].
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When clients leave it's usually because [_____). Here's what we've learned from it (_____).
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We set out to deliver (this result) for clients and we know that (this feeling) matters just as much.
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(This) is what we want to be known for.
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In 10 years, if we lean into (that thing we want to be known for), our business will look like (this.)
None of these questions show up on a quant screen. They don't move a Sharpe ratio or shorten a track record. But they're the questions your best clients could probably answer on your behalf, and the ones that come up in the moments when a client decides whether to stay or leave.
Qualitative due diligence isn't the soft stuff. It's the stuff that predicts whether a relationship survives a bad quarter. If you can't answer these 10 questions clearly, your investors will eventually answer them for you... and you may not like their version.
Start with one. Write down the honest answer, not the polished one. Then work through the rest.
frequently asked questions
1. What is qualitative due diligence in fund management?
Qualitative due diligence evaluates the people, culture, and decision-making behind a fund — as opposed to quantitative due diligence, which evaluates performance data like returns, volatility, and risk metrics. It asks why a manager does what they do, not just what they've delivered.
2. Why does qualitative due diligence matter as much as quantitative due diligence?
Track records describe the past; qualitative factors — conviction, consistency, how a team handles pressure — are better predictors of how a manager will behave in the next drawdown. Allocators increasingly weigh both because numbers alone don't reveal whether a manager will stick to their process when it's tested.
3. What questions should a fund manager be able to answer for investors?
At minimum: why their strategy needs to exist, where it diverges from peer consensus, what environments it thrives or struggles in, why clients stay, and why clients leave. If a manager can't answer these plainly, it's a signal worth flagging in diligence.
4. Why do clients actually leave asset managers?
Client attrition is rarely about a single bad quarter. It's more often about a mismatch between what was promised and what was delivered — in communication, in strategy fit, or in how the manager behaved under stress. [I couldn't source a specific attrition statistic for this — please verify or omit before publishing.]
5. How can a boutique fund manager stand out in a crowded market?
By being explicit about what they believe that their peers don't, and building their pitch, content, and client conversations around that point of difference — rather than leading with performance numbers alone, which are easy to commoditize and hard to differentiate on.