Money managers under the microscope
Hedge funds’ awful performance figures have been splashed all over the media for some time, but the effect this is having on the funds themselves could potentially be of deeper concern to investors.
According to a report by Moody’s, entitled “Market turmoil increases stress on hedge fund operations”, there are a multitude of potential dangers to watch out for as fund performance deteriorates and cost pressures grow.
For example — some hedge funds keen to save the pennies have combined previously independent jobs such as fund manager and portfolio valuer, affecting the quality of its operations, says the report.
The higher likelihood of legal action by investors disappointed by poor returns, meanwhile, could take management’s eye off the ball and affect a fund’s operations.