GLOBAL – The disclosure of detailed position-level data is seen as compromising the performance of hedge funds, according to a new survey by Capital Market Risk Advisors and the International Association of Financial Engineers.
At issue is the transparency of disclosure, and whether the release of such data compromises a hedge fund’s competitive edge.
As Mark Anson, chief investment officer of the California public employee pension fund Calpers said: “Transparency is an issue for all investors. However, there must be a balance between the disclosure of meaningful information to investors and the protection of a hedge fund manager’s proprietary knowledge.”
“The Investor Risk Committee conducted this survey as a step towards striking the appropriate balance,” Anson said.
“While investors, funds of funds and individual hedge fund managers appear to agree, in general, regarding whether disclosing position-level data compromises the performance of a fund,” the two organisations said in a statement, “the percentage of participants who believe that it has a ‘significant or material impact’ varies significantly by participant type.”
The survey found that 66% of investors thought the disclosure of position level data compromised a hedge fund’s performance – depending on strategy. Thirty-four percent of investors felt it had minimal or no impact. Amongst funds of funds respondents, the figures varied slightly. In this category, 55% of respondents thought position-level disclosure was a problem, depending on strategy. Eleven percent felt it had a significant of material impact; 34% saw minimal or now impact.
Amongst hedge funds themselves, 44% said it depends on strategy, 32% said it had a significant or material impact. Twenty-four percent saw minimal or no impact.
The IAFE’s Investor Risk Committee and CMRA surveyed institutional investors, hedge funds and funds of funds. They said the institutional investors had 479 billion dollars in capital under management; the funds of funds had 36 billion under management while the individual hedge funds that replied had 109 billion dollars under management.