The EIU surveyed more than 200 executives across a range of different groups earlier this year. Half of the sample were groups with more than $5bn of assets under management. We also tried to make sure we had a fairly even spread across the globe--US, EMEA and APAC-- to see if there were any trends that emerged.
The survey primarily focused on transparency and risk management. We wanted to understand if the needle had moved post-financial crisis with respect to those two areas, and if it had, if there were any insights we could draw in terms of how these groups were addressing those two considerations. Ultimately, we wanted to understand the difference in how the industry views traditional vs. alternative asset classes.
Transparency has long dominated institutional investors’ approach to selecting alternative funds, and the survey results suggested that managers are likewise paying greater attention to this as a matter of priority. More than 60% of respondents--both traditional and alternative--ranked transparency as the most important factor. Transparency is becoming a key area in terms of the way the global funds industry operates.
A lot of the focus of the survey is on what transparency means and why it has become so important. We and industry stakeholders are keen to understand the best way to ensure that an investment is doing what it says it should be doing. Whether you are an investor, a regulator or a manager, you want access to data that gives you that clarity.
The upshot is that people want to be sure that the fund product they allocate to--or are thinking of allocating to--is in good standing and ticks all the necessary boxes, regardless of whether it’s a vanilla long-only equity fund or a private equity fund. If the product says that there are certain investment restrictions that it needs to comply with, there needs to be a demonstrable way to show that is the case.
If there are details in the fund prospectus on fees and how they are calculated, there needs to be transparency around that so that investors feel they are getting value for money.