Alternative Investing Requires More Transparency: Survey

Northern Trust survey says transparency requirements are lagging behind demand.

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story_images_transparencyThe survey, which polled 200 institutional investors and asset managers, found respondents cited transparency as the leading investment consideration, for both alternative investments (62 per cent) and traditional investments (62 per cent).

It found transparency has become more significant following the financial crisis, cited as the most important post-investment consideration by 21 per cent for traditional assets and 17 per cent for alternative assets, compared to nine and three per cent, respectively, before the 2008 crisis.

“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, in a news release. “As alternative investing has reached the mainstream, the industry would benefit from consistent standards and stronger policies around transparency.”

According to the survey, risk management is the most important driver for transparency in both traditional and alternative investments. Nearly three-quarters (73 per cent) of respondents said portfolio risk management was the most important element, while about half said regulatory requirements (53 per cent) and competitive considerations (43 per cent) were the most important elements.

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