Hedge funds managers are known to be secretive and protective of their trading strategies, the “secret sauce” that generates their returns. Very little on how they trade or what they trade is revealed to the public or even their investors. While funds managing over $100 million AUM are required to file quarterly reports to disclose their positions, these reports are seriously flawed on their completeness and timeliness.
Distinct from the disclosure of positions, there is a further difference between transparency and disclosure, as pointed out in this article by the Hedge Fund Journal. Transparency is greater than sum of all disclosures and reveals what “a manager is up to” – for example, the risk management processes, the performance fees, and other structural elements in the fund. For most smaller investors, the task of performing proper due diligence and data analysis may prove too costly, which is why the ability and willingness of a fund to reveal key portfolio characteristics become so important for the investors to properly understand the risk and return profiles of their investments.
Why do investors care about and deserve greater transparency from their fund managers? The answer is simple, without this, we cannot understand their portfolio. It is only when we know how our funds are being deployed that we can actively manage unwanted risks in our portfolios, such as concentration risks on sectors and geographies, or beta risks where returns exhibit high correlation to broad market performance, rather than excess returns. Better yet, we can trigger stop losses to cap downside risks when our managers fail to perform as expected, or adopt new trading behaviours.
At Noviscient, transparency is one of our key beliefs and value propositions. We select and allocate to trading strategies based on trading signals received from our boutique fund managers, and we execute and risk manage the investor positions in real-time. We offer regular performance updates and full analytics on our online investor portal so our investors are kept informed at all times on what we are up to. We believe in our investment in careful selection, rigorous due diligence and risk management, and have nothing we wish to hide from our partners in investing.
If you are interested to find out more about our offerings, please contact us at firstname.lastname@example.org.