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Arthur Tully Bailey McCann, Opalesque New York

Valuation is one of the most complex and controversial issues faced by investors and managers alike. Investors are seeking ever more transparent and accountable data from managers and administrators about valuations, making it one of the riskiest tasks for fund executives.

A recent Ernst & Young report found a significant gap between managers and investors about who bears responsibility for valuations and the role of fund administrators in the process.

I spoke with Arthur Tully, Partner and Co-leader o the Global Hedge Fund Practice, Ernst & Young LLP, about the confusion in valuations and what it means for the industry.

According to Ernst & Young's fifth annual survey of the global hedge fund market, more than half of investors say it is important that a hedge fund outsource valuation to an independent, third party administrator. However, 71% of managers say outsourcing valuations poses a risk. Only one in four managers is confident that administrators can manage valuations effectively, especially when it comes to Level 3 assets. The report notes that managers are supported in this assessment, as many administrators lack the resources to indepe......................

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