Copying and distributing are prohibited without permission of the publisher
Hedge fund investors turn to managed accounts
25 November 2011
Investors got burnt by hedge funds in the financial crisis as opacity led to losses and in some cases fraud. But industry insiders argue there is a solution – managed accounts. Annabelle Palmer reports
Read more:
managed accounts
hedge funds Sciens Capital
USS
fraud
Hedge fund investors are reliant on the usefulness of their managers' black box – with transparency over what is actually being traded being limited by fund management industry standards. The dangers posed by this lack of oversight reached their nadir with the Bernie Madoff scandal, when $18bn of client money was stolen from a non-existent hedge fund.
Crucially in many cases the feeder funds which brought cash to Madoff were Ucits compliant – investors assumed this kite mark of approval meant their investments were with a reputable firm. But Ucits gives investors no transparency over what was done with the funds, enabling the crooked financer to make his smash and grab raid on investor’s cash.
But even in less extreme situations the lack of transparency in hedge funds can result in investors being trapped in “side-pockets” of illquid assets while the liquid funds are sold-off to meet the redemptions...
Access to this content is denied because you are not logged in. Please login to view this content
Already have an account?
Subscribe
Subscribers have unlimited access to all current and archive content. Start your
subscription today - click on the button below.
Free trial
Taking a free trial will give you access to the current issue for two weeks (excluding
some surveys and articles). Start your free trial today.
