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Alternative Market Briefing

European fund managers 'dressing up’ track record to gloss on performance

Tuesday, May 31, 2016

Komfie Manalo, Opalesque Asia:

A new study by global analytics firm Cerulli Associates has found that the problem of 'dressing up' track records by fund managers is getting worse. In its latest issue of The Cerulli Edge - Europe Edition, the report added that a fund selector at one UK-based institutional advisor said that even some larger fund managers are guilty of putting a gloss on achievements.

"Clarity--or lack thereof--is the issue. Investment consultants we interviewed complained that asset managers are submitting back-tested performance data as the numbers of a real fund," says Tony Griffiths, a senior analyst at Cerulli Associates. "Another common complaint is that it is not clear whether the numbers in performance data are net or gross of fees."

He added, "While consultants may be more forgiving of the latter issue, the overriding concern is that some managers are willing to 'fudge' their way to success."

Other issues include: Sweeping a poorly performing product under the carpet either by changing its name or its mandate; aggregated assets of a manager or a product including segregated mandates that the consultant cannot verify; data being changed without explanation between pitch and proposal; and managers launching or adapting products based primarily on market demand.

Managers build products based on personal convictions

The last example can be particularly frustr......................

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