Transparency a Concern for European Hedge Funds

According to its press release, the company’s survey earlier this year showed that all fund of hedge funds respondents said there would need to be further transparency in a hedge fund manager’s operations to attract more investors in the future. Additionally, 69% of respondents felt that failure to address transparency concerns would hinder growth of the market.

The pan-European survey explored the effects that changing investor profiles and increased institutional assets are having on the European hedge fund industry, the release said. The survey revealed that 80% of respondents think increased participation by institutional investors will bring increased regulation and standardization to those managing assets. Almost half (46%) of those surveyed said they would welcome increased regulation.

Around three quarters (76%) of firms interviewed that target the institutional market said they are already instituting or will be instituting a high level of standardization. In contrast, only about a third (32%) of all survey respondents were against further regulation and standardization, and most of those were firms serving high net worth investors.

Marc Russell-Jones, Vice President of Global Fund Services at Northern Trust, said in the release that 99% of hedge fund and fund of hedge funds managers said they outsource their custody and fund administration services to a third party, enabling them to focus more on portfolio management and operational oversight.

The white paper, “Forced” Institutionalisation of the Hedge Fund Industry, may be obtained by emailing Russell-Jones at mrj1@ntrs.com .