When it Comes to Alternative Investments, it's Buyer Beware
According to a New York University Stern School of Business study, one in five hedge fund managers misrepresents its fund or the fund's performance during due diligence investigations by investors.
The study noted that there were misrepresentations or inconsistencies in 42% of the due diligence reports they reviewed, and 21% of managers verbally stated incorrect information. This study was not about the outliers. The study reviewed 444 due diligence reports of funds with up to $8 billion in assets and mangers with an average of 19 years in the industry.
The moral of the story? Do not assume that what money managers tell you about their products is true. According to this study, almost half the time, they are likely misrepresenting their funds.
For more information, contact your Trust Fund counsel.
By Bill Sokol | September 10, 2014