Collecting The Numbers
December 01, 2002
Investors can't operate without a decent performance database but there is no cheap or easy solution, explains Meredith Jones, director of market research for Strategic Financial Solutions
Any serious fund of funds needs a database of hedge funds to use as a basic screening tool, a way of identifying promising managers as well as monitoring the performance of funds in their portfolio versus the universe of other managers.
The job of building an effective database is difficult. There are possibly over 5,000 funds in the hedge fund universe - depending on whose estimates you believe - and there is no central data source. The task is made more difficult by the refusal of many of the larger funds to give their data to any of the data vendors. As a result the startup fund of funds essentially has two options: build or buy.
Most of the bigger investors eventually opt for a combination of the two as they quickly realise that it is cheaper and easier to use data vendors to collect the bulk of the data. However,...
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