Convergence launches fund expense practices analyser service

Source: Convergence

Convergence, a provider of database, custom research and advisory services to the alternative asset manager industry, announced the launch of its Fund Expense Practices Analyzer service.

According to the company, the product is based on expense disclosures sourced from over 10,000 registered investment advisors that are normalized, categorized and grouped by manager type, primary investment strategy and size. The product provides empirical data that gives Advisors and Investors a view on common and uncommon expense disclosures and their use by advisors and peers. The expense disclosure database is updated with every new brochure and Customers will receive updates annually, or more frequently based on the service level purchased.

"The release of the Fund Expense Analyzer is quite timely in light of CALPERS announcement to reduce the Plan's stake in Hedge and Fund of Fund Advisors," said John Phinney, Convergence's Co-Managing Partner. In a recent CALPERS press release, Ted Eliopoulos, interim Chief Investment Officer at CalPERS stated, "One of our fundamental investment principles is that cost matters," noting that hedge funds are "an expensive investment vehicle, especially at our scale."

According to Convergence's George Evans, "Our data confirms CALPERS view on expenses and shows large differences between the types of expenses disclosed by Advisors of similar sizes and types. For example, while 92 percent of all advisors disclose Fund Accounting and Administration expenses, only 3 percent disclose Risk Management. At the Strategy level, Multi-Strategy advisors disclose 46 unique expense categories, the most of any of the 30 investment strategies tracked by Convergence, resulting in the greatest differential between the median and maximum expense category count within a strategy."

"Investors using the tool should be able to engage their managers in a more complete conversation about the management fees they pay and the expenses they may expect to incur, relative to what other advisors may be charging," notes Phinney. 

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