A Desire for Transparency

Investors are increasingly looking for more transparency in the investment funds industry and none more so than institutional investors. However, there is debate about what transparency means. An important aspect to transparency is appropriate disclosure and information rights. Independent oversight is also key, especially with regard to valuation of assets and when they are or become illiquid. There is now a trend for detailed valuation policies to be worked up and provided to investors in advance.

Even where a fund has an independent administrator whose responsibility is to provide the NAV, investors are drilling down further, to establish whether the administrator is doing this merely on the basis of data provided by the manager or whether this data comes from an independent source. The former is far less attractive to investors. Already, investor desire for enhanced independent valuation is having effects. For example, it has helped spawn a new up-and-coming