15 Jul 2020

ARP - Broker Dealer Practices

The key distinctions between ARP strategies in managed funds and broker dealer products

Alternative Risk Premia (or factor-based) strategies invests based on well understood, and academically documented, underlying factors. These  factors may explain and influence an asset’s risk and/or performance as building blocks for portfolio diversification. When institutional investors access this strategy via broker-dealer products, rather than managed funds, a different type of due diligence is necessary.

This DDQ provides a list of questions that institutional investors and asset managers should ask when conducting due diligence on broker-dealer products.

This memo covers:

  • The key distinctions between managed funds and broker-dealer products including in areas such as fiduciary responsibility, product design, disclosures, costs, and access.
  • Key questions that institutional investors and asset managers should ask when conducting due diligence on broker-dealer products.