Prime brokers deemed unimportant by investors
18 July 2012 New Jersey
Image: Shutterstock
A survey by Corgentum unearthed the surprising discovery that just 17 percent of investors felt that prime brokers were the most important hedge fund service provider, as compared to administrators and auditors.
Corgentum consulting managing partner Jason Scharfman said: “ The survey data indicates a potentially dangerous shift in the opposite direction signifying that investors have reverted to their old ways and are devaluing the role of prime brokers.”
The survey also found that the biggest concerns investors have about hedge fund service providers are capital loss (35 percent) and reputational risks (32 percent).
Investors were found to be increasingly relying on administrators to perform asset verification (48 percent) and are still concerned with valuation (24 percent), whilst continuing to minimise the importance of administrator functions, such as cash management (14 percent) and fund governance (7 percent).
Corgentum consulting managing partner Jason Scharfman said: “ The survey data indicates a potentially dangerous shift in the opposite direction signifying that investors have reverted to their old ways and are devaluing the role of prime brokers.”
The survey also found that the biggest concerns investors have about hedge fund service providers are capital loss (35 percent) and reputational risks (32 percent).
Investors were found to be increasingly relying on administrators to perform asset verification (48 percent) and are still concerned with valuation (24 percent), whilst continuing to minimise the importance of administrator functions, such as cash management (14 percent) and fund governance (7 percent).
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