Report: Hedge Funds Give Institutions Transparency They Want

Jun 14 2011 | 8:44am ET

Hedge fund managers are opening their books to institutional investors, according to the latest survey by Preqin.

A full 90% of the 50 institutional investors polled by the hedge fund data provider in May felt they were getting sufficient portfolio transparency across their hedge fund portfolios. Asked if they felt hedge fund transparency had improved in the past three years, a full 96% said yes.

Of the investors surveyed, 78% told Preqin that since the financial crisis they were looking more closely at the underlying investments in hedge funds in which they invest, while 22% said they’d made no change in their due diligence practices.

So adamant have institutional investors become about transparency, 84% said they would not invest in a hedge fund that failed to meet their requirements. Those requirements, according to the Preqin survey, included breakdowns of hedge fund portfolios by sector or industry (65%), profit and loss attribution (60%), geographic breakdowns of the portfolio (60%), names of top five positions (54%), and full position level transparency on a time-lagged basis (54%).

Another 23% of respondents were even more demanding, requiring real-time access to hedge fund portfolio positions.


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Publisher's Note