Transparency has more than doubled in importance for asset owners when making traditional and alternative investments since the financial crisis, though investors are often unsure how to achieve it, a survey shows.
In the case of alternative investments, the need for transparency has shot up by 400% since 2008, albeit from a low base.
Over two-thirds of a sample of 200 investment professionals said a “degree of transparency” was very important and led all other considerations.
Northern Trust commission the survey and found transparency was cited as the most important post-investment consideration by 21% of investors in traditional assets and 17 % for investors in alternatives, according to the executives who gave their views.
This compares to 9% and 3%, respectively, before the crisis.
Nearly three-quarters felt that risk management was the most important driver for transparency in traditional and alternative investments.
“These results tell us that investment transparency is a growing priority, but asset managers and institutional investors remain unsure of how to best achieve it,” said Pete Cherecwich, president of corporate and institutional services at Northern Trust. “As alternative investing has reached the mainstream, the industry would benefit from consistent standards and stronger policies around transparency.”
The survey showed that asset managers and investors used a variety of sources for information on their investments, including specialist databases, media reports and in-person visits.
Four out of five respondents rely heavily on internal data management and analytic capabilities to manage their data. Only 6% outsource this function entirely.
The survey, carried out by the Economist Intelligence Unit, tapped the views of 200 executives from private equity firms, hedge funds, corporations, nonprofits and insurance companies.
“These results tell us that investment transparency is a growing priority, but asset managers and institutional investors remain unsure of how to best achieve it,” said Pete Cherecwich, President of Corporate and Institutional Services at Northern Trust. “As alternative investing has reached the mainstream, the industry would benefit from consistent standards and stronger policies around transparency.
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