Hedge Fund Intelligence New standards in Investor Transparency | Page 5

NEW STANDARDS IN INVESTOR TRANSPARENCY

Investors set the bar for new
standards of transparency

I

“

f you’re a hedge fund manager, your dream scenario is that you get $10 billion
locked up for 10 years and never report to anyone,” says Christopher Fawcett,
senior investment officer (SIO) at Permal Investment Management, which has
about $22 billion invested in hedge funds across a range of strategies.
No manager could disagree and keep a straight face. The simple fact of the
matter is that maintaining pellucid records and providing them to investors,
regulators and other s on a timely and consistent basis is expensive and timeconsuming.
The good governance gospel tells you that transparency ultimately supports
performance. But try telling that to a famously uncommunicative manager like
Moore Capital, which few market participants would be in any hurry to make
change its spots.
Others believe, however, that even managers like Moore may be unable to
resist the industry’s inexorable drift towards more rigorous reporting and
open communication.
“Companies like Moore have been able to live off the calling card of their
performance for many years, but I believe if Moore were starting out today it
would not be able to raise new funds without becoming more transparent,”
says one former Moore manager. “Four or five years from now, I think we will
see a very different Moore.”
In broad terms, pressure for change has come from two sources at more or less
the same time: regulators and investors. In Europe, the regulatory pressure has
come chiefly from the Alternative Investment Fund Managers Directive (AIFMD)
and, more recently, the European Market Infrastructure Regulation (EMIR),

© HedgeFund Intelligence

June 2014 Special Report 5