The “new normal”: How virtual conferencing has optimised investor due diligence during Covid-19

Online video meeting

The “fluidity” of virtual conferencing has proved a “silver lining” during the pandemic, optimising allocator time during the investor due diligence process, according to new research by alternatives-focused software-as-a-service and data management company Vidrio Financial.

In a new market commentary, Mazen Jabban, founder and CEO of Vidrio Financial, examined the sweeping changes and far-reaching impact of virtual manager meetings on hedge fund manager-investor relationships over the course of the Covid-19 pandemic.

New Vidrio Financial research shows 100 per cent of those surveyed expect a transition to a hybrid mix of virtual and in-person meetings – the so-called “new normal” – when it comes to the due diligence and asset allocation process, with one manager not expecting return to in-person due diligence meetings until 2022.

The firm’s latest ‘Vidrio Views’ monthly market survey of global allocators and LPs – collectively representing more than USD100 billion in alternatives assets under management – explored how virtual manager conferencing is shaping allocator views 15 months into the pandemic, gauging perspectives on the allocation process as well as the improved cost and time efficiencies resulting from reductions in meetings and travel expenses.

Vidrio – which supports institutional allocators deploying assets primarily to hedge funds, managed accounts, long only, private equity, and other alternative asset classes – sees virtual meetings as representing a more efficient way to assess managers than had been pre-pandemic.

“We’ve always recommended that allocators try to do as much research, analysis and preparation before any onsite due diligence visit to ensure onsite time is optimised,” Jabban said, noting that the “fluidity” of remote meetings has proved a “silver lining” during Covid, when measured against the extensive planning and organisation of travel and accommodation required for multi-manager trips during pre-Covid times.

“While there is certainly great value to kicking the tires on-site and making eye contact in-person with a manager, the trade-off that has come through the forced change to virtual is a more efficient use of time and resources, something that can be a precious commodity and more beneficial for more financially aware investment plans like public pensions.”

Underlining the degree to which virtual conferencing has penetrated manager-investor relationships, the research indicated almost three-quarters of allocators have now invested with new managers without meeting in person, while just 29 per cent had generally made allocations only to existing managers during the pandemic.

Elsewhere, Vidrio’s August survey found that almost two-thirds – 62.5 per cent – said they had “not really” changed the pace and speed of allocations to new managers despite Covid-19. Meanwhile, 37.5 per cent have seen “no” difference in the pace and speed of their allocation programs pre- or post-Covid.

Jabban said: “What seems to come across is a level of confidence with allocators able to make selections without meeting in person, which was a far cry from early 2020 when the pandemic hit and many new managers lagged on the fundraising front for the good part of the year as allocators were reticent to pull the trigger or review their investment guidelines and allow for new manager selections virtually.”

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Hugh Leask
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