Northern Trust Survey: Surge in Demand Shows Transparency is Key to Success for Alts Investing
June 20 2017 - 9:30AM
Business Wire
Responsibility for Ensuring Transparency is in
Flux
As alternative investments become more mainstream, information
about investment vehicles, underlying assets and other risk
management data has become more important to investors, but best
practices around transparency requirements are lagging behind the
demand, according to a survey released today by Northern Trust.
The independent survey of 200 asset managers and institutional
investors, conducted in February 2017 by The Economist Intelligence
Unit (EIU) and sponsored by Northern Trust, reveals that
transparency leads all investment considerations and has grown in
importance since the 2008 financial crisis. Respondents indicated
the higher level of scrutiny applies to both traditional and
alternative investments, such as hedge funds, private equity,
infrastructure, real estate and natural resources:
- “Degree of transparency” was cited as
very important by 63 percent for alternative and 62 percent for
traditional investments, leading all other considerations.
- Transparency became more significant
after the financial crisis, cited as the most important
post-investment consideration by 21 percent for traditional assets
and 17 percent for alternatives, compared to 9 and 3 percent,
respectively, pre-crisis.
- Risk management is the most important
driver for transparency in traditional or alternative investments:
73 percent of respondents said portfolio risk management was the
most important element, while 53 percent cited regulatory
requirements and 43 percent cited competitive considerations.
However, there was no consensus around which department within
an organization ensures that existing and potential investments are
adequately transparent, with responses pointing most often to
either the investment management or risk and compliance
functions.
“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. “As
alternative investing has reached the mainstream, the industry
would benefit from consistent standards and stronger policies
around transparency. Working with the world’s most sophisticated
investors, we are committed to enabling greater transparency
through continued research and technology development.”
The survey showed that asset managers and investors tap a
variety of sources for information on both traditional and
alternative investments, including specialist databases, media
reports and in-person visits. Four out of five respondents rely
heavily on internal data management and analytic capabilities to
manage their data. Only 6 percent outsource this function
entirely.
“Our clients are seeking the best way to analyze, interpret and
present their data,” said Penelope Biggs, Chief Strategy Officer,
Corporate and Institutional Services at Northern Trust. “We
collaborate with clients to translate data into intuitive and
meaningful information, delivered through innovative technology and
transparency solutions, to help them focus on their
investments.”
The EIU surveyed 200 executives of organizations ranging from
private equity firms and hedge funds to corporations, nonprofits
and insurance companies. Respondents were dispersed globally, with
60 respondents each from North America, Asia-Pacific and Europe,
and the remainder from the Middle East. Half the sample is composed
of respondents from organizations with more than $5 billion in
global assets under management. A whitepaper detailing the survey
findings, The Path to Transparency in Alternatives Investing, can
be found on Northern Trust’s website.
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider
of wealth management, asset servicing, asset management and banking
to corporations, institutions, affluent families and individuals.
Founded in Chicago in 1889, Northern Trust has offices in the
United States in 19 states and Washington, D.C., and 22
international locations in Canada, Europe, the Middle East and the
Asia-Pacific region. As of March 31, 2017, Northern Trust had
assets under custody of US$7.1 trillion, and assets under
management of US$1 trillion. For more than 125 years, Northern
Trust has earned distinction as an industry leader for exceptional
service, financial expertise, integrity and innovation. Visit
northerntrust.com or follow us on Twitter @NorthernTrust.
Northern Trust Corporation, Head Office: 50 South La Salle
Street, Chicago, Illinois 60603 U.S.A., incorporated with limited
liability in the U.S. Global legal and regulatory information can
be found at https://www.northerntrust.com/disclosures.
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Media Contacts:Northern Trust CorporationEMEA and APAC:Camilla
Greene+44 207 982-2176Camilla.Greene@ntrs.comorNorth America:John
O'Connell+1-312-444-2388John.O'Connell@ntrs.comhttp://www.northerntrust.com
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