The Managed Funds Association is jumping into the data collection business with an effort to build the most comprehensive
hedge fund industry database available.
Similar to the way the Investment Company Institute maintains a detailed database of the mutual fund industry, the MFA is seeking to become the foremost depository of
hedge fund data.
The ultimate objective, according to MFA representatives, is not to compete with existing
hedge fund databases, but to strengthen and fine-tune the association’s ability to lobby lawmakers.
“As the primary source of industry information for policymakers, the media and the public, it’s important that we collect and aggregate data in a confidential and timely manner from as many managers as possible,” said Richard Baker, the MFA’s president and chief executive.
While there are already about a dozen database firms tracking the
hedge fund industry for general performance and market-sizing purposes, there has never been a comprehensive database that claims to capture the entire industry.
Unlike mutual funds that register with the Securities and Exchange Commission, hedge funds report to databases voluntarily, and the decision is often motivated by a manager’s desire to attract investors.
The MFA, which has 2,400 members and is widely regarded as the premier
hedge fund industry trade group, is partnering with PerTrac Financial Solutions LLC to aggregate information from existing databases and gather data from hedge funds not already in the database.
Key to the effort is PerTrac’s P-Card technology, which enables
hedge fund managers to transfer data to both investors and data collectors in an encrypted format.
The MFA is currently taking proposals from accounting firms to coordinate and organize the flow of data, which is expected to include a fund’s assets, number of investors, location and specific strategies.
The encrypted data format, combined with the third-party accounting firm, is designed both for security purposes and to provide a level of
hedge fund anonymity.
The MFA stated that it will share industry information solely on an aggregated basis, and that no fund-specific information collected, including fund names, will be released.
“We’re looking to make a cosmos out of the chaos out there right now,” said Meredith Jones, managing director with PerTrac.
According to PerTrac’s most recent
hedge fund market-sizing report, compiled in early 2009, the global
hedge fund industry included about 22,000 hedge funds and 5,300
hedge fund management firms.
Estimates of total
hedge fund assets, Ms. Jones acknowledged, has been all over the map from less than $1 trillion to more than $2 trillion.
By consolidating information from existing databases and giving hedge funds a secure means of reporting, Ms. Jones hopes the industry can come up with some concrete data.
“There will probably always be some subset of hedge funds that won’t want to report,” she said. “But you want to try to get the best data you can possibly have.”
