18/03/2009

Hedge fund investors shaken, not deterred

Investors have not been put off allocating to hedge funds despite feeling shaken by the changing hedge fund landscape, according to a survey of money managers, investors and service providers.

Constellation Investment Consulting, a New Jersey-based risk manager, conducted an evaluation that revealed only 13% of those investors surveyed said they would no longer trust alternative asset managers. Instead, they would manage their own portfolios or allocate to traditional asset managers.

“This was a surprise,” said Berl Kaufman, COO. “We expected an immediate shift toward the use of asset managers that already have greater transparency … It is obvious that investors will conduct more due diligence and expect third-parties like administrators, auditors and consultants to become a part of the process even more.”

The study, which surveyed 300 money managers, investors and service providers, showed that 80% of managers and 75% of service providers said they expected due diligence teams to conduct more thorough analysis due to Madoff’s fraud.