Evidence continues to build that investors are getting comfortable parking capital with hedge funds without the benefit of on-site reviews.
Before the coronavirus pandemic, major investors’ due-diligence processes almost universally included visits during which they looked over the managers’ infrastructures and watched their traders in action. Many initially stuck with those policies as stay-at-home orders took effect in March, meaning any fresh commitments had to go to firms they already examined in person.
Now, it appears the long-term nature of the crisis has led to an adjustment. As one prime-brokerage executive put it: “You can’t just keep topping up with the managers already in your portfolio...”
Traders are about to be hit with new U.S. rules they’ve long resisted: the first-ever federal restrictions on how much hedge funds and other firms can speculate on key commodities such as oil and metals.
Yet there is a silver lining in having the regulations finished while appointees of President Donald Trump are running government agencies. The measures are softer than what was put forth when Barack Obama was president or what might be on the table should Joe Biden capture the White House next month...
The US markets regulator has rebuked private equity and hedge fund managers for overcharging investors and secretly favouring their high-paying clients over other customers in clear contravention of existing regulations.
The criticisms by the Securities and Exchange Commission will intensify debate over whether investors are being treated fairly by the handful of super-wealthy Wall Street barons who have accumulated multibillion-dollar fortunes by running opaque private equity strategies and hedge funds...
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