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how do family offices typically approach due diligence when investing in private debt

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Family offices typically approach due diligence when investing in private debt by conducting a comprehensive analysis of the asset class and the fund’s investment strategy 1 2 . The due diligence process involves assessing the fund’s track record, investment process, risk management, and alignment of interests between the fund manager and investors 1 . Family offices also evaluate the fund’s management team, investment philosophy, and the quality of the underlying assets 2 .

According to a survey by Aeon Investments, family offices are increasingly turning to alternatives, including private debt, and the next layer of due diligence is to assess the fund’s investment strategy 3 4 . Family office investment managers said the strong performance of alternatives is the key reason for the switch followed by diversification 4 .

Collaboration is common among ultra-secretive family offices, and they often team up with expert managers or funds to invest in private credit 5 . Family offices may also prefer that their private debt investments contain stable monthly incomes or have a low correlation with other asset classes 2 .

In summary, family offices approach due diligence when investing in private debt by conducting a comprehensive analysis of the asset class, the fund’s investment strategy, and the quality of the underlying assets. They also evaluate the fund’s management team, investment philosophy, and the alignment of interests between the fund manager and investors. Family offices may collaborate with expert managers or funds to invest in private credit and prefer investments that contain stable monthly incomes or have a low correlation with other asset classes.