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Alternative Market Briefing

91% of allocators will not invest in hedge fund with poor corporate governance even if operations, performance are fine

Wednesday, September 21, 2011

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John Donohoe
Benedicte Gravrand, Opalesque Geneva:

Corporate governance is not just an increasingly familiar term; it is a process that hedge funders (along with the whole corporate world) would be wise to pay attention to. It is coming to their street now and will surely become part of the industry’s primary focus when designing its central values and presenting itself to investors – especially the more meticulous institutional investors.

It has already become more important than ever for hedge funds, said a report by Moody’s Investors Service, as their investor-base has shifted from high-net-worth individuals to institutional investors, who usually are more thorough when conducting due diligence. And for institutional investors working a long-term investment strategy, environmental, social and corporate governance (ESG) factors are believed to be important drivers of risk and return, an MSCI research paper found (Opalesque Exclusive).

It increasingly supported by regulators, by industry bodies AIMA and the HFSB and by other associations. Some big hedge fund houses are already gathering the necessary ingredients by creating new positions: BlackRock, for example, has just hired Amra Balic as the head of corporate governance and re......................

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