Operational Due Diligence

Operational Due Diligence

AIST has produced a fact sheet to provide AIST member funds with more clarity and direction on investment manager operational due diligence (ODD) reporting.

APRA expects funds to undertake ODD reporting in order to understand, quantify and manage operational risk inherent in appointing an external fund manager. The reporting aims to put a spotlight on the many and wide-ranging processes that need to work effectively for an investment manager to deliver to an agreed mandate. Such processes include the ability of the manager to stay in business and the culture that exists within the manager’s operations.

Earlier this year, AIST’s ODD Working Group released an ODD Guidance note as a cost-effective framework to help AIST member funds meet their due diligence obligations. The Guidance Note has been adopted by many funds, ODD providers and by more than 35 fund managers. 

AIST also issued a letter template in March 2017 for writing to investment managers regarding operational due diligence of investments.

While many funds have made a firm start on the ODD reporting journey, the industry approach is still evolving. 

The latest fact sheet can be distributed to fund managers to guide them when considering the appointment of an ODD provider.