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This article is written by Tyler Kim, the Chief Information Officer for MaplesFS, responsible for Information Technology and Data Management globally.
Institutional investors can realise direct financial benefits from position-level transparency – specifically through increasing the efficiency of markets for the over-the-counter ("OTC") instruments they hold in separately managed accounts.
Transparency 1.0
Over the past few years, hedge fund transparency has vastly improved. According to a recent report by NOVUS Research, "Over 20% of funds provide full position-level transparency."
Institutional investors that have been pushing hedge fund managers for greater transparency have utilised this information toenhance manager oversight, risk management and governance.
Investors are now able to monitor managers’ decisions, activities and results at a more granular level, in turn allowing them to pose more informed questions about investmentrisks and performance. For example, risk models and scenario analyses can now be done at a holdings level – reducing the need for less accurate performance-based proxies. Ultimately, transparency has enabled fiduciaries to better understand the sophisticated alternative strategies that they have allocated capital to.
Inefficiency creates opportunity
However, more can be done with this information. By virtue of their sizable investments into hedge funds, the nature of the ass...................... To view our full article Click here
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