DDQ
A DDQ (Due Diligence Questionnaire) is a structured set of questions used to evaluate a manager’s strategy, operations, controls, and risks.
Allocator relevance: A standard institutional diligence artifact that drives comparability, risk identification, and approval decisions.
Expanded Definition
DDQs help allocators evaluate investment process, portfolio construction, operations, compliance, valuation policy, and business stability. They are especially important when performance alone cannot establish risk controls or operational maturity. DDQs also enable standardized comparisons across managers and strategies.
For emerging managers, DDQ quality often reflects institutional readiness and the ability to meet allocator reporting expectations.
How It Works in Practice
Allocators send DDQs during diligence; managers respond with narrative answers and supporting documents. Follow-up questions, reference checks, and ODD reviews typically validate DDQ claims.
Decision Authority and Governance
DDQs are reviewed by investment teams, ODD/compliance, and often the IC. Governance requires that DDQ responses map to evidence and that inconsistencies are resolved before approval.
Common Misconceptions
- DDQs are generic paperwork with little signal.
- A polished DDQ proves operational strength.
- DDQs replace reference checks and ongoing monitoring.
Key Takeaways
- DDQs standardize diligence across managers.
- Evidence alignment matters more than language quality.
- They are strongest when paired with ODD and verification.