82% of all survey respondents reported that investors have become more demanding with respect to transparency since the financial crisis. As one manager put it, “We have seen our investors become much more demanding since 2008.
In addition, the larger the hedge fund, the more universal and pronounced was the demand for increased transparency. Among the largest hedge funds surveyed ($1 billion or more in AUM), a full 100% reported increased demand for transparency by investors.
The survey data also indicates that as investors have demanded more transparency, hedge funds, particularly the industry’s larger ones, have begun adapting their philosophies, policies and staff headcounts in order to deliver it to them. “We hired a chief marketing officer post-Madoff to deal with institutional investors on a day-to-day basis,” said one hedge fund manager.
The shift toward increased transparency is one of the survey’s more intriguing findings and represents one of the most striking ways in which the industry has changed since the financial crisis. This shift is also highly symbolic of the hedge fund industry’s willingness to adapt not only its operational policies, but also its very culture, with some players becoming significantly more open and forthcoming with key information (including details around positions, compositions of portfolio assets, etc.) in order to appeal to institutional investors who are injecting billions worth of new capital into hedge funds around the world.