What does a performance review in due diligence primarily assess?

A performance review in due diligence primarily assesses consistency in performance results over time. This assessment is crucial because it evaluates how reliably a fund has performed relative to its benchmarks and its historical performance. Consistency indicates not just the ability to generate returns, but the stability of those returns over different market conditions, which can inform about the fund's management quality and investment approach.

By analyzing historical performance data, due diligence teams can identify patterns and assess whether the fund manager's past results are indicative of future success. This consistency can help investors decide whether they can trust the fund to meet their investment objectives and risk tolerance.

While assessing risk management practices, legal compliance, and investment strategies are also vital components of due diligence, the primary focus of performance review is on the track record of returns and how those returns have been achieved consistently over time.