• determine the pricing sources

  • ascertain the frequency with which the portfolio is marked-to-market

  • understand how volatility is managed

  • determine the manager’s risk limits

  • ascertain whether the manager assesses counterparty risk

  • review the manager’s maximum exposure to any one counterparty

  • understand diversification percentages and the criteria behind them

  • determine the average number of positions in the portfolio, including its largest position in any one issuer and in any sector or industry

  • determine the maximum percentage of the portfolio invested in any one position

  • determine the manager’s cash positions, minimum and maximum amounts, minimum and maximum percentage of the portfolio and the average position

  • request detailed information concerning manager’s use of leverage and understand how leverage is calculated (e.g., use of derivative instruments)

  • determine the maximum amount of leverage employed, the ranges and average leverage used

  • understand the instruments used for hedging

  • analyze the liquidity of the portfolio and determine whether there were liquidity problems in the past

  • determine what information is available from the manager on an ongoing basis (performance, portfolio of securities) and the frequency that such information will be provided (daily, weekly, monthly)

  • determine whether information provided by the manager is verified from independent sources (e.g. transparency of portfolio)

  • review the manager’s use of soft dollars, historical and pro forma

  • analyze past performance (identify return drivers)

  • determine investment style (past, present and future)

  • ascertain amount of assets under management – Determine manager’s ability to handle continued growth or determine the cause if there was a dramatic decrease in assets