LPs unhappy with quality of disclosure in fund marketing

In fact, some institutions found a “lack of credibility” in the reporting of track records, with data that can be misleading and manipulated to put the firm in the best light, the report said.

This has to make some GPs nervous — the Securities and Exchange Commission has come out publicly stating it is hunting for firms that try to mislead investors on track records when raising a fund.

Other key findings in the report, include: 35 is the average number of fund documents that investors who were surveyed said they receive each quarter. Only an average of six make it through initial filtering; 54 percent of unsolicited fund marketing documents received by investors do not match their investment criteria; 72 percent of investors considered initial communication by fund marketers on performance track record to be average or worse; 51 percent want to be able to compare initial fund marketing documents, but only 14 percent consider it possible to do so at present.

A full 61 percent of respondents said they find new investment opportunities through direct approaches from managers, down from 72 percent in 2012, while only 37 percent of respondents said they found new fund opportunities through placement agents. This is well below the 55 percent recorded in 2012.

Chris Witkowsky is editor of peHUB