Hedge Funds Becoming More Transparent; Female Firm-Ownership On The Rise

Harriet Davies

27 April 2012

Increasing asset flows from pension funds and other institutional investors continue to drive enhanced transparency within the hedge fund industry, a new survey from Rothstein Kass has found. In other findings, women are gaining ground in the sector but remain under-represented.

The firm’s first-quarter outlook saw 400 hedge fund managers, representing 771 vehicles, weigh in with their views. Of the participants, over 70 per cent reported assets under management under $500 million.

“This year, our research shows an industry that continues to benefit from institutional asset flows and efforts to enhance transparency. At the same time, managers are cognizant of the challenges that lie ahead, as legislative efforts move from theoretical to reality,” said Howard Altman, co-chief executive of Rothstein Kass and principal-in-charge of the Financial Services Group.

Hedge fund managers cited concerns such as staffing and reporting requirements to deal with new reporting requirements (40 per cent), while around 30 per cent of funds with under $100 million AuM have registered with the Securities and Exchange Commission. Meanwhile, nearly 80 per cent of managers believe seeding is critical to a successful launch year.

In other findings, UCITS infiltration in the US remains low, despite the popularity of these vehicles in Europe, says Rothstein Kass. Of the over 700 funds polled, only 17 UCITS vehicles were reported. Yesterday New York-based Pan Reliance Capital Advisors said it is preparing to launch a multi-strategy fund of funds pursuing alternative strategies under UCITS guidelines.

Low female, minority representation

The hedge fund industry remains very male dominated, the survey found, with women-owned firms making up just 5.8 per cent of polled firms. Minority populations made up 10.3 per cent of ownership.

There appear to be signs of change though, as hedge fund firms launched within the last three years are three times more likely to report 50 per cent or more women and minority ownership.

“One of the most encouraging findings of our latest research suggests that women are finding increased opportunity at emerging hedge funds. From our experience, we’re seeing growing interest from entrepreneurial women seeking to launch hedge funds, as well as growing consensus that greater concentrations of women in the industry will bring needed perspective as the sector continues its evolution,” said Kelly Easterling, principal-in-charge of Rothstein Kass’ Walnut Creek office.