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Komfie Manalo, Opalesque Asia:

Fund managers and investors believe that performance is one of the major factors driving change in the hedge fund industry, a Preqin survey showed in its latest Hedge Fund Spotlight.

Preqin said that the disappointment of a large proportion (79%) of investors with the returns of hedge funds over the past 12 months is leading to reduced confidence in these funds' ability to meet portfolio goals, which in turn has led to outflows of capital from hedge funds in recent quarters.

The report said, "Industry performance has brought to the fore the issue of fees and the extent to which fund manager and investor interests are properly aligned and shifted the balance of negotiations in favor of investors. Some 59% of respondents felt that fund terms and conditions had shifted in favor of investors over the past 12 months, compared with only 8% that felt that they changed in favor of fund managers."

The study added that in order to address investors’ concerns and ensure continued allocations to hedge funds, fund managers will need to take measures to reassure investors about their funds and educate them about the potential benefits of the asset class.

"Fund managers are seeking to do so by improving transparency on their strategy, risks and business, investing in their middle- and back-office infrastructure and leading educational initiatives to improve knowledge about the industry a......................

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