Is There a Cost to Transparency?

Abstract

Conducting the first direct tests for the cost of private transparency, the authors examined whether a willingness to offer transparency to investors is beneficial or costly in terms of hedge fund returns. Transparency is implicit when a fund accepts managed accounts because such accounts are directly controlled by investors. Overall, the authors found no evidence that transparency harms fund returns. They also found no support for concerns that managers offering transparency suffer from selection bias.

Keywords: Alternative Investments, Best Practices, Regulatory Issues, Strategy Categories, Portfolio Management, Alternative Investment Portfolio Management Strategies, Hedge Funds