Sat, Jul 26, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

EDHEC-Risk survey reveals that “transparency, information and governance” tops the list of concerns for European fund managers

Tuesday, April 17, 2012
Opalesque Industry Update - More than 160 high-level European fund management industry professionals were surveyed by EDHEC-Risk as part of the “Risk and Regulation in the European Fund Management Industry” research chair, sponsored by CACEIS.

For the respondents to this survey, entitled “Shedding Light on Non-Financial Risks – a European Survey,” the main causes of the increase in non-financial risks are firstly the growing sophistication of operations (a cause considered important by 77% of respondents), followed by the reduced capacity of some intermediaries to guarantee deposits (59%), unclear or inappropriate regulation (57%) and finally the total absence of responsibility of management companies regarding restitution (53%).

The main message from this study is that the regulatory priorities for the respondents relate to themes to which the regulator has paid less attention in recent work, notably AIFMD. For the respondents, “transparency, information and governance” are the priority for the regulation of non-financial risks, followed by the financial responsibility of the industry. On the latter point, it is important to stress the recognition that non-financial risks are largely the consequence of the fund manager’s decisions.

On “transparency, information and governance,” the primary concern of respondents, a huge majority (91%) agrees that the regulator must ensure that information is genuinely fair, clear and not misleading.

On the financial responsibility of the industry in non-financial risks, the second greatest concern for respondents, 79% consider that “fiduciary duties of asset managers should be reinforced, by stating that they must invest for the sole benefit of their clients,” and 67% agree that asset managers should have greater responsibility for non-financial risks. They are therefore in complete agreement with a previous EDHEC-Risk Institute study, which considered that the responsibility for decisions and compliance with regulatory obligations does not rest with the depositary alone.

Responsibilities for the restitution of assets should be contractually defined between depositaries and asset managers; for 68% of respondents this should be done at the creation of the fund. Moreover, the depositaries should only be unconditionally responsible for the assets that they actually control (69%), and responsibilities should therefore be defined by asset class.

In the area of distribution, a strong majority of respondents (81%) is in favour of clarifying responsibilities according to who controls the information, with distributors having a role to play as the first line of defence for investors (69%).

The costs of stronger protection should be largely supported by the industry and would not be totally transferable to investors. Strengthening the regulation would therefore result in a net cost for asset managers (for 70% of respondents), depositaries (69%) and custodians (73%).

Finally, faced with the growing complexity of UCITS and the resulting increase in counterparty risks, the idea of secure UCITS funds, where the depositary would be unconditionally responsible (contractually or legally) for the restitution of assets, should be an option to consider, according to 67% of respondents.

Press release

bc

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Events – AIMA Australian Hedge Fund Forum, Sept. 16, Sydney[more]

    AIMA Australia invite you to join us at our annual Hedge Fund Forum on Tuesday 16th September 2014 at the Sofitel Sydney Wentworth. The AIMA Australian Hedge Fund Forum is a non-profit hedge fund conference organised by the industry for the industry, featuring quality Australian and internation

  2. Opalesque Roundtable: Success in hedge fund marketing not linked to performance, but investor appetite[more]

    Komfie Manalo, Opalesque Asia: Success in marketing a fund is not linked to the performance, but to investor appetite, to the way you can market the fund, and to how much time you can spend to raise assets, said Antoine Rolland, the CEO of incubator and seeding firm

  3. Opalesque Exclusive: Loeb, Grantham cite growing economic concerns in letters[more]

    Bailey McCann, Opalesque New York: Hedge fund manager Daniel Loeb, head of Third Point, and Jeremy Grantham of Grantham, Mayo, Van Otterloo & Co. have both released their quarterly investor letters today. While news is positive on some fronts, and both men see pockets of opportunity, they also h

  4. Investing – Hedge funds expect Netflix earnings to catapult forward, Third Point's Loeb takes stakes in Fibra Uno, YPF, Royal DSM, Lake Capital in talks to back Engine Group[more]

    Hedge funds expect Netflix earnings to catapult forward From Investing.com: Netflix has made major strides forward in 2014 despite ongoing battles with the FCC and cable companies over the issue of net neutrality. The FCC has now received over 500,000 comments from the public on its pend

  5. Opalesque Roundtable: European family offices struggle to retain their investments in offshore hedge funds[more]

    Komfie Manalo, Opalesque Asia: The European Union’s Alternative Investment Fund Managers Directive (AIFMD) will constrain investment opportunities amidst concern a number of U.S. fund managers will stop marketing their products in the European Union under the new rule, said Valentin Bohländer fro