Administration April 1, 2004

Survey: Position Disclosure Hurts Hedge Fund Competition

January 16, 2003 (PLANSPONSOR.com) - Forcing hedge funds to publicly disclose detailed position-level data will hurt the funds' performance, a new survey found.

Reported by

Fred Schneyer

The survey by Capital Market Risk Advisors and the International Association of Financial Engineers (IAFE) found that 66% of investors thought a public disclosure of position data would hurt a hedge fund – depending on its particular strategy – while 34% contended such disclosure would have minimal or no impact, IPE reported.

Amongst hedge funds themselves, 44% said the impact depended on strategy while 32% said it had a significant or material impact. Some 24% saw minimal or no impact, according to the survey.

Among funds of funds respondents, 55% of respondents thought position-level disclosure was a problem, depending on strategy. Some 11% felt it had a significant of material impact while 34% saw minimal or no impact.

The IAFE’s Investor Risk Committee and CMRA surveyed institutional investors, hedge funds and funds of funds. They said the institutional investors had $479 billion under management; the funds of funds had $36 billion under management while the individual hedge funds that replied had $109 billion under management.

In a related development, the San Jose (California) Mercury News recently won a court battle with CalPERS to force the giant fund to release detailed performance information on its private equity investments (See CalPERS Posts Private Equity Data on Web). The California State Teachers’ Retirement Fund (CalSTRS) pension fund also agreed to release venture capital data (See CalSTRS Agrees to VC Data Release ).