DiligenceExpress

ADV Filing Review

The Form ADV is a key regulatory document. Many investment managers submit their annual ADV update at the same time of the year as their financial statements, creating a resourcing and bandwidth challenge for investors in their diligence process.

Castle Hall's tech team has developed proprietary software to "capture" ADV data, recording information on more than 50,000 fund entities.

DiligenceExpress offers the industry comprehensive, unlimited ADV analysis, including automated change reports - all free of charge.

Reputational Due Diligence ("RDD")

The starting point of due diligence is a review of public records - regulatory filings, legal and watchlist databases, and media - from flagship newspapers to social media posts.

Put simply, if a manager is "in the news" and an investor is not aware of publicly available information, then the investor's process may be found to be deficient.

Reputational Diligence offers investors a cost effective, RegTech solution, with three components:

ADV Analytics

Leveraging DiligenceExpress, Reputational Diligence adds proprietary analytical factors to the core ADV data. Castle Hall flags factors such as a short track record, small headcount, existence of disciplinary disclosures, or existence of a related party broker dealer. Each RDD review enables the ADV to become a source of actionable due diligence insights.

DDIQ Database & Adverse Media Checks

Castle Hall integrates the Exiger DDIQ platform into each Reputational Diligence engagement. DDIQ is an automated due diligence solution based on a cognitive computing platform that accesses thousands of sources. Inputs include open and deep web sources, corporate registration records and compliance databases.

Reputational Diligence enables investors to conduct initial and ongoing reputational due diligence across:

• Watchlists (more than 800 watchlists analysed)
• Politically exposed persons
• Sanctions
• Legal databases
• Fines and regulatory actions
• Adverse media

Importantly, Castle Hall reviews all results and curates content prior to inclusion in each Reputational Diligence report.

Reputational Diligence can be actioned:

• At the management company level
• At the executive / individual level
• For service providers
• For private equity, to monitor underlying portfolio companies

Castle Hall also partners with Exiger to perform full scope background investigations on both management companies and individual fund executives. Exiger background checks, fully integrated into the Castle Hall platform, can be conducted on an initial or update basis.

Media Monitoring - Powered by Dow Jones Factiva

Reputational Diligence includes curated, real time media monitoring. Castle Hall leverages the power of Dow Jones Factiva to create a fully institutional media monitoring tool. Factiva accesses more than 30,000 premium sources, including licensed publications, websites and blogs, supported by Castle Hall's own review of industry publications and media sources.

Curated news, not unfiltered feeds.

Critically, we carefully curate news feeds to remove the false positives and duplicates that clog standard internet searches. Clients then use DiligenceHub to access curated content via the Dow Jones Factiva portal, meaning that all media information is permanently archived and fully licensed from the content provider with no copyright infringement.

User preferences allow either daily or weekly email summaries to be sent to every member of the investment, ODD, risk and compliance teams.

Audited Financial Statements

Financial Statement Review

The annual financial statement audit is one of the most important diligence resources available to asset owners. However, the process to review incoming financial statements, especially for large portfolios, is time consuming.

Castle Hall's financial statement process leverages DiligenceHub, our online due diligence app. DiligenceHub moves AFS analysis beyond the traditional spreadsheet, enabling review of detailed fund level data - and portfolio wide analytics.

Castle Hall inputs key income statement, balance sheet, portfolio and footnote data into DiligenceHub (with comparatives). Then, we use 50 analytics factors to analyze the financial reporting profile of each fund in the portfolio.

Identify funds with an increasing percentage of level 3 assets, with an expense ratio over 50 basis points, and review subsequent events and contingencies footnote disclosures.

All at the touch of a button.

Visit Castle Hall's DueDiligenceUniversity to have access to more White Papers and Diligence Primers.

OpsVerification

"Trust but Verify"

The starting point for ODD is, of course, "Trust but Verify".

As a baseline for every manager and fund diligence review, OpsVerification provides a cost effective, anti-fraud check.

• Castle Hall uses proprietary questionnaires to populate OpsData, Castle Hall's detailed diligence data pack. OpsData replaces inconsistent, manager generated DDQ formats with a standardized ODD reference manual. Castle Hall also reviews the offering document to capture key terms and conditions, including provisions around suspension of redemptions, gates, and "other" expenses - all typically ignored in manager sourced DDQs.
• An extensive document request list is sent to the manager, with documents received (at both manager and specific fund level) stored in the DiligenceHub data room. No more searching for the most recent prospectus, the last financial statements, or the organization chart. Security is ensured as data is hosted within encrypted servers hosted by Citrix. 
• Castle Hall independently verifies service provider relationships including administrator, prime brokers, external consultants and fund directors. We then check all public domain information, including local jurisdiction registrations and memberships such as the Standards Board for Alternative Investments, the UN PRI, or AIMA. 
• As a key added value, OpsData includes more than 100 analytics factors. These can be reviewed online within DiligenceHub at the manager / fund level and then in the context of portfolio wide analytics. Which of my managers have assets below $500 million, do not have a chief compliance officer, or do not have a cybersecurity policy? Transform subjective opinion contained in individual, "old style" ODD reports into an objective, data driven diligence tool.

OpsMonitor

Manager Outreach

ODD used to be about the "report", prepared when a new manager was onboarded, and then potentially refreshed every 2-3 years. This legacy approach to ODD has now been superceded by active, ongoing manager monitoring.

OpsMonitor offers investors a consistent, auditable monitoring platform, capturing changes at the manager and fund level intra year.

• Quarterly / semi annual questionnaires are sent to each manager. What has changed - a new fund launch, a new office...or a new regulatory inspection or lawsuit? Has anyone left - if so, why? Any changes in service providers? Has the manager had a cyber incident, or enacted their disaster recovery plan this quarter?
• Routine manager communications are reviewed. The investor's front office may review the performance commentary, but is the ODD team aware of a new compliance officer or the resignation of the CFO disclosed in this month's manager letter?
• Portfolio wide, interactive dashboard of monitoring factors - who is "in the red" this quarter?
• OpsData is updated quarterly, including updates to manager / fund analytics factors. Portfolio wide analytics remain current at all times.
• Updated documents received and stored in the DiligenceHub data room.
• "Trust but verify" checks updated annually.

OpsReview

Onsite Diligence

OpsReview is Castle Hall’s flagship onsite due diligence process, delivering a comprehensive diligence assessment of each manager and fund. OpsReview provides detailed due diligence coverage for material manager allocations, higher risk managers and more complex asset classes.

• OpsData - detailed data pack, including all Castle Hall’s “trust but verify” checks.
• Onsite interview to evaluate the manager’s control environment, systems and culture face-to-face
• Background checks conducted by Castle Hall's investigative diligence partner, Exiger
• Administrator due diligence
• Comprehensive due diligence report , including detailed narrative of the business risk of the manager, legal risk of the fund, and operational risk of the control environment. Castle Hall considers 20 risk areas within every OpsReview engagement.
• Expanded analytics factors - more than 300 data points are captured and can then be analyzed at the fund or portfolio wide level. How many of your managers have not formed a valuation committee, or have a valuation committee which does not meet as of the date of each net asset calculation? 
• Assessment, including strengths and risks and Castle Hall’s overall diligence opinion, expressed as “accept”, “watch list” or “reject”.

Total Diligence

Enhanced Oversight

Due diligence is no longer "just" about ODD. Leveraging our decade plus experience and the DiligenceHub tech platform, Castle Hall helps our clients expand their oversight of external managers beyond traditional operational metrics.

CyberSecurityDiligence - expanded due diligence as asset manager cybersecurity policies and procedures.

ESGDiligence - considering ESG risks at the management company and strategy level.

RiskDiligence - review of risk management procedures and analysis of risk controls.

Total Diligence provides enriched oversight across each manager and fund in a portfolio.