12/10/2011 Author: Gywn Roberts

Editor's view: 12 October 2011

Managers who swerve transparency are doomed to failure. Oddly though, the firms that choose to embrace clarity, go on to pick up interest from investors and consultants, but ultimately fail to win mandates, may also be doomed to a similar fate.

It’s a Kafkaesque puzzle. But an increasingly common one, according to a number of managers who have complained to HFMWeek that following an arduous due diligence process – and remember this can last for nine months – the precise reasons for their eventual failure are never revealed.  

On one level this sparse feedback is understandable. It’s basically a marginal play that means those with a house in some sort of order are given the knowledge to make sure the next attempt is a successful one.

Unfortunately it is the funds that need help the most that are kept in the dark. Speaking to consultants – who are after all working for the investor – it appears that good intentions to provide feedback are often dashed by a fear that openly ‘criticising’ a manager renders them liable.

HFMWeek disagrees with this over-caution. Given that the number of managers far outweighs annual mandates surely this fear is misplaced. Most managers would rather listen to the message – even a critical one – than shoot the messenger.  

But unless this changes, many funds are doomed to repeat history. Not because they’ve forgotten it, but just because the lessons haven’t been delivered in the first place.

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