Less than half of LPs accept standard DDQs

According to new data, less than half (32.7%) of LPs will accept an industry standard DDQs as part of their due diligence process.

DiligenceVault’s 2021 Manager Survey Whitepaper: How RFPs and DDQs Get Done found that around a fifth (23.2%) of investors will accept a standard DDQ with additional custom questions, while 58.8% of LPs send custom DDQs to their managers.

RFP/DDQ requests

According to the white paper, when it comes to receiving RFPs and DDQs, larger GPs field the most requests. At the same time, larger managers tend to have more funds and products which they market to investors, and therefore need to respond to more information requests.

DiligenceVault found more than half (58%) of GPs with more than $100bn in AUM tend to receive more than 500 RFPs/DDQs per year. In comparison, this amount of requests is only seen by 9% of managers with $50bn-$100bn AUM and 2% of managers with $10bn-$50bn AUM.

For between 100-500 requests per year, only a third (33%) of GPs with more than $100bn AUM receive this amount, compared to 64% of managers with $50bn-$100bn AUM, 40% with $10bn-$50bn AUM and only 12% of managers with between $1bn-$10bn of AUM.

On the contrary, smaller managers receive much fewer requests per year. All managers with $500m-$1bn of AUM receive less than 50 RFP/DDQs per year, while 80% of those with less than $500m AUM receive the same amount. Similarly, 65% of managers with $1bn-$10bn AUM receive less than 50 requests each year.

RFP/DDQ technology

Keeping the number of requests in mind, it's understandable that larger managers have the capacity and capability to use dedicated technology to handle the RFP/DDQ information requests.

The majority (71%) of managers with more than $100bn of AUM use dedicated RFP/DDQ technology, compared to only 64% of managers with $50bn-$100bn of AUM. This decreases again to 40% of managers with $10bn-$50bn of AUM.

On the flip side, only 12% of managers with $1bn-$10bn of AUM use dedicated RFP/DDQ  technology to handle the requests, compared to 6% of managers with $500m-$1bn of AUM and 7% of managers with less than $500m use tech.

DiligenceVault’s survey received responses from 173 fund managers, representing various sizes, asset classes and strategies. Of these, 63% of respondents were from North America, 20% from APAC and 17% from EMEA.

Founded in 2014, DiligenceVault provides information exchange and communication solutions for asset owners, allocators and fund managers.