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Hedge Fund Investors Research

Hedge Fund Investors Research

Investors Investigating Hedge Funds More Thoroughly Today

Hedge funds suffered terrible losses during the financial crisis and now, it appears that investors are exacting their revenge. Well, maybe that's a stretch, but investors are certainly turning the table on hedge funds by sniffing out the less talented hedge fund managers and increasing their due diligence. Institutional investors are especially picky when selecting which managers to trust with their money, as a Reuters report shows.
"I'm not a conference room type of guy," sniffed Chelo, director of research for Tacoma, Washington-based Benchmark Plus, a $1.8 billion so-called fund of hedge funds that invests money with 25 managers. "It's very easy for people to fake it for two hours in a conference room, but it's a lot more difficult if you are at their desk going through their portfolio."

Chelo, 39, typifies the new, harsher reality facing the $1.9 trillion hedge fund business. In the aftermath of the industry's generally terrible performance during the financial crisis, institutional investors such as pension funds, university endowments and non-profit groups are far more finicky about where they put their dollars.

These newly-empowered investors are increasingly demanding -- and receiving -- a cut in fees, as well as provisions that require managers to meet certain performance goals and provide greater flexibility to ditch a fund if it flounders. And like Chelo, they are also doing a lot more snooping around before writing a check.  Source

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