Thu, Jun 30, 2016
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. Blackstone buys minority stake in New York-based credit hedge fund Marathon[more]

    Benedicte Gravrand, Opalesque Geneva: Blackstone Strategic Capital Holdings Fund, a vehicle managed by Blackstone Alternative Asset Management (BAAM), has acquired a passive, minority interest in Marathon Asset Management, for an undisclosed sum. Based in New York,

  2. Investing - Soros, Druckenmiller among hedgies profiting in market plunge, Hedge funds were most bullish on bonds since 2004 before Brexit, Surprise Brexit vote unleashes scramble for dollars, High-yield hit on Brexit but no panic selling, Scientist turned hedge fund founder lured to pound, euro, Hedge fund avoids commodities, posts big gains[more]

    Soros, Druckenmiller among hedgies profiting in market plunge From HITC.com: Bullish positions in gold and volatility and well-timed short bets on China and emerging markets, among other areas, were some of the trades that benefited hedge funds on Friday as markets digested Britons' s

  3. Manager Profile - A 26-year old hedge fund manager called Brexit — here's what he thinks about the historic vote[more]

    From Businessinsider.com: Taylor Mann is not your typical fund manager. The twenty-six year old Texas A&M graduate manages Pine Capital in Larue, Texas (population 160), where he resides with his three-year old daughter. Also atypical compared with many of the largest funds out there, Mann makes

  4. People - Mariner Investment’s co-CIO Williams to leave $5.5bn firm, IOOF hires new alternatives portfolio manager[more]

    Mariner Investment’s co-CIO Williams to leave $5.5bn firm From Bloomberg.com: Basil Williams, co-chief investment officer of Mariner Investment Group, is leaving the $5.5 billion hedge-fund firm after negotiations to renew his contract failed. Williams will stay in his role until t

  5. Hedge Fund Due Diligence Exchange offers complete due diligence reports at $1500[more]

    Matthias Knab, Opalesque: HFDDX is offering complete alternative investment due diligence reports at $1500 US. Industry professionals can simply go to www.hfddx.com and indicate their interest in sponsoring one or more DD Reports for $1500 each.