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From Bailey McCann, Opalesque New York:
In order to attract and retain long term investment, as well as top portfolio managers, hedge funds will need to have solid succession plans in place along with governance processes that empower boards to make effective decisions according to Ernst & Young's annual global hedge fund survey, released in November. The study polled 92 hedge fund managers who manage some US$600 bn, and 42 institutional investors with over US$130 bn allocated to hedge funds. The survey covered a range of issues including: governance, fund expenses, administration, succession and capital raising and found that while investors and funds are aligned on many of these issues, divisions remain when it comes to succession planning and governance.
"The recovery of the hedge fund market has been encouraging, but as the industry comes of age, investors are getting increasingly interested in governance and supervision where there remains considerable gaps in perception and in reality," said Ratan Engineer, global leader of Ernst & Young's Asset Management practice in a statement about the survey.
Succession
Both new and mature funds are facing increased pressure from investors to deal with key man risk, and offer a clearly delineated succession plan. According to the survey, "nearly two-thirds of investors agree that having a well articulated succession plan in place is important to their investment decisions."
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