Carne Global Financial Services recently released a research paper about the views of institutional hedge fund allocators on hedge fund corporate governance. The study found that in the last three years, hedge fund governance has become more of an issue to asset allocators. Allocators are concerned with the independence and involvement of fund directors and the impact fund governance can have on operational risk. The study also found:
- 91% of allocators agreed that poor governance would cause them to avoid investing in a fund, even if it met other operational and performance criteria;
- 76% of allocators have already decided against investing on at least one occasion due to governance concerns;
- 80% of allocators have experienced difficulty in discovering how many directorships are held by independent directors on fund boards; and
- 87% of allocators would like to see the majority of hedge fund boards' membership held by independent directors.
A full copy of the report is available here.