GPs clear up transparency issues

Just over half of LPs have experienced greater transparency from fund managers since 2015, a new report claims.

More than half of fund managers have increased their transparency over the past two years, according to a new report.

The LP blueprint from Intralinks found that 53 percent of limited partners reported improved transparency from fund managers since 2015. By contrast, 43 percent had experienced no change and the rest believed firms had reduced the clarity of their operations.

Despite this progress, just 18 percent of LPs were “very satisfied” with the clarity received from fund managers. Although the majority of respondents claimed to be “somewhat satisfied” with their efforts, 9 percent remained “very dissatisfied” with the current level of transparency.

“Often, GPs will have investors asking for different templates, but they don’t always know what LPs are looking for, or in what specific format they want the data,” Meghan McAlpine, director of strategy and product marketing at Intralinks, said. “They need to get a better understanding from LPs on where they want transparency and meet their needs that way, rather than just providing a blanket template approach.”

The shortcomings do not appear to have impacted investor demand for alternative assets. Two-thirds of LPs are looking to raise their allocations by 1-10 percent in 2017 and more than 35 percent of those surveyed already had over 30 percent of their portfolio allocated to alternative investments, the report noted.

One unnamed pension fund told Intralinks it expected different levels of insight depending on the fund manager. Private equity funds were considered more transparent as it is “pretty clear what the assets are”.

“Most of our GPs want to provide us with more communications than we even need,” the LP said.

“I think what they are trying to do is keep the consulting community happy. If they lose faith among that community, they are history.”

The report follows calls for a move toward standardised reporting requirements in the US. Jennifer Choi, managing director of industry affairs at the Institutional Limited Partnerships Association, told Private Equity International’s sister publication, Private Funds Management, it would increase the opportunity to compare relative fees and expenses among private funds.

More than 140 LPs responded to the Intralinks survey, of which 52 percent were based in North America, 31 percent in Europe and 15 percent in Asia-Pacific. More than one-fifth of respondents were public pensions, 15 percent were consultants and 13 percent were either endowments or family offices.