Investors to Hedge Funds: Show Me the Money (and How You Got It)

Institutional investors appear committed to hedge fund investing, but fund managers will face widerranging and more in-depth scrutiny, according to a survey by SEI and Greenwich Associates.

Hedge funds fulfilling performance expectations and embracing transparency will retain and capture assets, the survey found. The need for greater transparency and enhanced client reporting and communications from hedge fund managers was brought on by the worst year on record for hedge fund performance, according to an SEI news release.

SEI collaborated on the survey with Greenwich Associates, initially polling institutional investors in Continental Europe, the United Kingdom and the United States at the end of August. The firms reinterviewed respondents in November as the financial crisis deepened to help gauge the impact of market turmoil on institutional attitudes and plans concerning hedge funds, the release said.

While portfolio transparency was named by just one out of four institutions as a “very important” selection factor in the first-round survey, investors named portfolio transparency as the No. 1 investment criteria demanding more weight in the second survey.

Source: SEI, www.seic.com/ims/underthemicroscope.