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Matthias Knab reports from the HedgeFundsWorld conference in Tokyo: S. Donald Sussman, chairman and CEO of Paloma Partners says he is an optimist for the hedge fund industry but a realist about the necessary changes. According to Sussman, the dramatic asset flows into hedge funds are just a part of a larger transformation of institutional money management. And this is just the start – within the next few years we will witness significant product innovation, portfolio restructuring and industry realignment.
Sussman thinks the weak performance so far this year is a temporary issue, and urges to look into the difficulties that have a more permanent character, concerning transparency, risk management and backoffice controls. For hedge funds that take their business serious it will be necessity to show “excellence” in these areas. Talking to investors, Sussman dearly recommends all to ask “harder” questions, to go out and “see for yourself”, not to rely on prospectuses or promises, even to control the FOF manager.
As to pricing, Mr. Sussman recommends all investors to check with each manager: 1. Are there written guidelines? 2. Do the manager and the administrator have the experts and the resources to price all positions, especially OTCs? 3. Is the valuation method consistent over the years? Paloma Partners offers all interested investors a guidebook written by Leon Metzger to master this area, which can be obtained at the firm. Company website ...................... To view our full article Click here
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