Key Takeaways from the London ODD Roundtable 2025

London’s ODD community gathered for a timely and insightful roundtable to discuss evolving practices, current concerns, and forward-looking strategies in operational due diligence. Hosted in a candid and collaborative setting, here are the key takeaways from the session:

1. Recording Manager Meetings: Efficiency vs. Openness

• The group discussed the growing desire to record manager meetings to streamline AI-powered notetaking and generate post-meeting summaries.
• Despite the potential efficiency gains, most ODD professionals agreed that fund General Counsels are unlikely to permit on-the-record diligence discussions.
  
• There’s also a concern that recordings could stifle candor; managers may be less transparent if they know they’re being recorded.
• Best practice remains document via thorough notes, and confirm key points over email

2. AI in the Diligence Ecosystem

• AI adoption is expanding, but not uniformly.
• Many managers are exploring Microsoft Copilot and similar tools, but hedge fund CTOs in particular voiced hesitation, citing concerns around data security and control frameworks.
  
• ODD teams are focusing diligence conversations on the controls around acceptable use, rather than the specific tools themselves.

3. Cybersecurity Reviews: Depth vs. Speed

• Most teams escalate cyber-related issues to in-house or external experts, particularly when red flags or exceptions arise.
• However, involving technical experts often leads to slower diligence cycles, a growing challenge in time-sensitive mandates. Use of technical experts varied based on size of firm and resource capacity as well.
• A standout best practice: ask managers to share how they responded to a past cyber breach to assess both preparedness and execution.

4. Third-Party Oversight: Trust, But Verify

• Managers typically provide a high-level overview of outsourced service relationships.
  
• ODD professionals are increasingly pushing for direct conversations with third-party providers, especially when the service provider firm is lesser known.
  
• A key theme: transparency around passthrough fees tied to service providers. While acceptable in principle if the net of fees performance makes sense, investors want clarity on what’s being passed through, and what is the process of getting fees that are passed through.
  
• Independent valuation costs are broadly accepted as reasonable passthrough expenses, while other non-essential costs seem to be receiving greater scrutiny.

5. Valuation Oversight: Reading Between the Minutes

• In reviewing valuation committee minutes, the following are seen as healthy indicators:
  1. No discrepancies is a potential red flag, as it may indicate rubber-stamping rather than thoughtful review and debate.
  2. Diversity of opinion and active dialogue is valued.
     
  3. Any change in valuation methodology warrants close scrutiny.

6. ODD Reporting Trends: Less is More

• The length of ODD reports continues to shrink.
• Internal stakeholders rely primarily on executive summaries.
• External clients may request more detail, but concise, focused reporting is the new norm.

7. DDQ Friction: Pushback and Process

• Some allocators get better acceptance of a DDQ when they combine IDD and ODD responses, aiming to reduce duplication.
• Some managers resist meetings if they’ve already submitted DDQs, while others provide incomplete or low-effort responses.
• Key takeaway: a filled DDQ does not replace a live diligence conversation.

8. What Keeps ODD Professionals Up at Night

• Team resourcing and the growing complexity of the ODD role.
• Staying ahead of regulatory expectations and evolving manager practices.
• A culture of proactive transparency was highlighted, when a COO picks up the phone to flag an issue, it builds lasting trust.

9. Using ODD Consultants: Oversight and Objectivity

• Co-sourcing is a good solution when working with ODD consultants around resource management. 
• When using third-party ODD consultants, governance matters:
  
  1. How are they selected and what is their true mandate?
     
  2. How is their performance monitored?
     
  3. What’s the escalation path if concerns arise during consultant review of fund managers?
     
• Some firms use consultants when they are not able to do diligence on the manager because of a structural conflict. 
• ODD teams who rely heavily on consultants may feel like they do not have as close of a relationship with the manager with those that do not use a consultant. 

The London roundtable reinforced that while tools and tactics may evolve, the foundation of effective ODD remains unchanged: transparency, communication, and a healthy dose of skepticism.