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Alternative Market Briefing

Various levels of transparency create two-tier hedge fund industry

Thursday, November 29, 2012

Benedicte Gravrand, Opalesque Geneva:

Fund managers are responding to an increasing demand for transparency from investors. However, there remains information asymmetry in the asset management world, which is challenge when it comes to identifying good managers. A Swiss consultant proposes a system whereby managers offer a symmetric fee schedule, and suggests this would be a win-win situation for both investors and asset managers in the long run.

Dr. Benita von Lindeiner, senior consultant at c-alm AG (for "comprehensive asset liability management") in St. Gallen, Switzerland, talked about the value of hedge fund transparency during Terrapinn’s Hedge Funds World conference in Zurich earlier this month.

C-alm tackled the question of asset management cost in a study on the Swiss second pillar (state pension fund system) last year, after the Swiss government had ordered an increase in cost transparency from the pension system, following a general crisis of confidence. The main findings of that study were that there was indeed a lack of cost transparency in the Swiss second pillar and asset management costs were high (between 2005 and 2009).

Does transparency actually mean anything for investors?

"We found some evidence in the study that there was a negative correlation between asset management costs and the returns," she notes.......................

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