Shannon Hawthorne

08/06/2011 Author: Shannon Hawthorne

Information is the key to meeting investor needs

As the saying goes, ‘if at first you don’t succeed, try again’. That said, for many hedge fund managers, persistence and tenacity are simply not translating into allocations.

Presenting hedge fund offerings to a multitude of investors only to fail at the due diligence stage can be not only disheartening, but also confusing, with a marked lack of detailed investor feedback meaning that many managers do not actually know the areas in which they are coming up short.

“Fund managers get the end message that, ‘We really liked your fund but you’re not quite right for our strategy at the moment,’” says Phillip Chapple, executive director at offshore consulting firm KB Associates. “Managers may have all the best intentions, but they cannot meet investor expectations if they don’t know what the expectations are.”

The industry is taking steps to bridge this gap, however, with last week seeing the publication of a guide to institutional investment by industry body Aima’s Investor Steering Committee.

The report, entitled: ‘A Guide to Institutional Investors’ Views and Preferences Regarding Hedge Fund Operational Infrastructures’, includes contributions from CalPERS, USS, BA Pension Investment Management, UBP and Albourne Partners, and covers a number of topics, including board composition, portfolio risk and fee structure.

An increasingly institutional investor base requires managers to be both willing and able to adapt to evolving investor needs, and such feedback is clearly vital to the continued growth of the sector.

And increased clarity over best practice expectations should hopefully mean that managers can focus on doing what hedge funds do best – generating alpha.

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