Red Flags in Due Diligence before Investing in Funds

Overview:
Before capital moves, caution must lead. Globally tested diligence frameworks now guide Indian investors.

Key Points:

• Check if fund manager invests personal capital (ideal ≥ 2 percent of fund size).
• Scrutinise auditor and custodian independence.
• Avoid funds with opaque side-pocket policies or delayed reporting.
• Red flags: frequent strategy changes, inconsistent Net Asset Value history, or complex offshore routing.
• India’s complaint ratio = 0.08 per 100 investors (FY 2025) vs global 0.05 average—improving trend.
• Verify fund’s SEBI registration, trustee background, and PPM disclosures before commitment.

Truvest Capital Insight:
In alternatives, what you avoid matters as much as what you buy.

Disclaimer: Educational content only. Not investment advice.