Risk management to be focus for hedge funds, report reveals

20 January 2011

Risk management reporting and infrastructure needs to be a focus for hedge funds if they want to increase investor confidence, the authors of a new report have claimed.

Research by the SEI and Greenwich Associates showed that three-quarters of institutional investors saw infrastructure surrounding risk management as “very important”.

Clarity of investment strategy was also deemed to be of the same significance by 79 per cent of respondents - which the report authors said shows an increased demand for transparency among investors.

Up to 79 per cent cited a lack of transparency as their main worry, a figure which was up from 56 per cent seen in 2009.

Phil Masterson, managing director for SEI’s Investment Manager Services division, said: “Managers must differentiate themselves through increased transparency, enhanced risk management, and reporting as well as better overall client service to gain and retain assets post-financial crisis and post-Madoff.

“We’ve been making investments in new technologies and enhancing our services to help our clients do just that over the past 18 months and we’ll continue to help them stay ahead of the curve.”

Further findings from the study showed that liquidity risk was named as the main worry for more than half of hedge fund investors.

By Jim Ottewill

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