Gwyn Roberts

06/04/2011 Author: Gwyn Roberts

Editor's view: 7 April 2011

‘We are all in the business of transparency’, has become an industry mantra. A facetious, investor may well respond, ‘yes, but what happened to the business of performance?’ However, for investors, managers and service providers, performance and transparency are crucially linked.

Hedge fund indices – and there are some very good ones in existence – are generally believed to be flawed, as managers decide not to report in bad times or back report when the sun shines.

By throwing its hat into the index ring, with a series of indices that will not be self-selecting, GlobeOp may well end up setting an important precedent. Its current brace – capital flows and forward redemptions – should enable funds to benchmark their own liquidity, against an index of their peers.

They will also eerily tell the future, showing just how unsettled investors are. Performance, despite the month’s macro shocks, looks to have held up in March, but any movement in forward redemptions will show the impact of other risk management concerns – a key to the psyche of investors.

GlobeOp’s own client portfolio may not be totally representative – it has less equity funds than other administrators – but the new indices are definitely useful. It is also a marketing coup. Investors care about performance, but they are genuinely fascinated by the business of transparency, good news for an admin currently promoting its own index. 

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