Benedicte Gravrand, Opalesque Geneva:
A new survey shows the hedge fund industry is taking its compliance obligations seriously. However, the sheer capital commitment it entails, even if it makes the financial world a safer place, can be a real burden for many managers.
According to The Cost of Compliance, a new report produced by the Alternative Investment Management Association (AIMA), the Managed Funds Association (MFA) and KPMG International, the average spent on compliance is currently at least $700,000 for small fund managers, $6 million for medium-size fund managers and $14 million for large fund managers.
The survey, which also includes interviews, was conducted between May and August 2013, among 200 hedge fund managers representing more than $190 billion in AuM.
Those managers, it was found, have already spent more than $3 billion so far on compliance costs, that is, anywhere between 5% and 10% of their operating costs on compliance technology, headcount and strategy.
Hard on smaller firms
However, this is not easy on smaller firms, and on those trying to launch. As a percentage of their assets and relative to operating costs, they seem to be spending more money compared to their larger peers. "More than a third of hedge fund managers polled with less th......................
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