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SINGAPORE: A survey by accounting firm Ernst & Young has found that the global downturn is forcing hedge fund managers to respond swiftly to investors' demands.
The survey of 100 of the world's largest hedge funds notes that there have been significant changes to the governance, fund administration and investor reporting.
Among the changes, 40 per cent of those surveyed have changed their liquidity terms while 38 per cent changed their investor reporting.
Fifty-six per cent surveyed had made or planned to make changes to redemption terms and/or fees.
One in four has lowered fees because of investor pressure with nearly half having done such to entice new capital.
More controversially, almost a third of managers opted to impose gates or suspensions on redemptions during the crisis.
Despite talk about the re-domiciling of fund operations due to impending US tax legislation, the survey found that few funds are seriously considering doing so.
Managers predict that the hedge fund industry will see consolidation as a result of recent events and expected regulation.
Increasing costs and greater barriers to entry will also mean fewer and smaller start-ups than prior to the crisis.
- 938 LIVE/yb
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