Investors in Fund of Hedge Funds

Investors in Fund of Hedge Funds

Investors in Fund of Hedge Funds Call for Changes

Investors are calling for fund of fund managers to do more due diligence on the hedge funds they invest in and to be more involved in what they are trading.  Following several investment fund scandals, limited partners are trying to exert more influence over fund of hedge fund managers.
The $570-billion fund of funds industry faces the headache of conducting tougher background checks on managers and third parties like prime brokers, as well as researching hidden risks, while at the same time fending off client demands for fee cuts.
Institutional investors, who now account for over half of hedge fund assets, are cranking up the pressure after firms such as Man Group's (EMG.L) RMF and UBP failed to spot U.S. financier Bernard Madoff's $65 billion fraud, while many funds were slow to reinvest cash in last year's rally, missing out on big gains.
"We will ask for more transparency regarding underlying exposures and negotiate fees," said Theo Jeurissen, chief investment officer of the 35-billion-euro ($47.65 billion) pension fund for metal and mechanical workers PMT.  Source

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