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Alternative asset managers see increase in complexity during Q1

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Alternative asset managers saw an increase in “complexity” during the first quarter of 2017, with 152 managers, or 2 per cent, moving to a high complexity profile in their operational and business model, according to Convergence.

The increase in complexity was led by hedge funds, with 78 funds moving to high complexity, compared to 34 private equity funds, 10 real estate funds, and 28 “other category”.
Convergence assesses manager risk by tracking and monitoring 40 business and operational factors, including internal valuation, self-administration, and qualified audits. Convergence data has demonstrated a strong historical correlation between growth in fund complexity and levels of alternative manager risk.
“The quarter saw movements up and down the complexity curve across all fund types, and we expect to see continued changes as 225 new managers were added, based on our most recent view of Q1 data,” says John Phinney (pictured), co-president at Convergence.

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