Performance presentation standards for hedge funds - what
aren't you telling me?
Opalesque recently published an interesting perspective by
Agecroft Partners on the lack of consistency across the hedge fund
industry on how net performance is calculated and presented.
The author rightly pointed out that calculating and presenting
net performance is not simply a matter of subtracting all fees and
expenses from gross returns - simple changes to expense
allocations, valuation guidelines, fee breaks on founders'
share classes, the passage of time etc. can all skew the
calculation and presentation of net performance.
The good news is that the CFA Institute is composing performance
presentation standards for the hedge fund industry which they are
expected to announce later this year. If broadly adopted, the
standards could level - and perhaps simplify - the playing field
for all managers.
