Hedge Fund Transparency

Abstract

Hedge fund transparency is like pornography--it is hard to describe, but you know it when you see it. A great debate currently rages over the extent to which hedge funds should disclose their investment portfolios. Advocates of transparency argue that hedge fund managers should be held to the same standard of disclosure as their other investments. However, hedge fund managers and even some investors argue that disclosure of the hedge fund manager's positions will adversely affect performance. Is it possible to reach some common ground between these two views? The author believes that a level of hedge fund transparency can be achieved that will satisfy both hedge fund managers and their investors. After having described why investors want transparency, the author attempts to define what transparency means with respect to hedge fund managers and provides a solution that may suit the parties involved.