According to Corgentum Survey, private equity investors and hedge funds have pledged to expand on the resources directed at ensuring alternative data compliance. Almost 83 private equity investors and hedge funds have partnered to allocate more resources to the meticulous evaluation of compliance procedures. The evaluations are expected to focus on the use of research by the alternative investment managers that are conducted by third-parties including expert networks.
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78% Of The Participants Voted In Favor Of The Review Process
As per the details, investors highlight the recent move to help ensure better privacy and security for the private equity and hedge funds managers while relying on alternative data. A massive 78% of the participants were in favor of implementing such a system that thoroughly evaluates the use of the aforementioned data by the managers. An incredible 96% that already had a review system in place was willing to pledge to expand their efforts towards due diligence in this niche.
According to the investors, fund managers have recently been relying excessively on alternative data. Europe’s General Data Protection Regulation (GDPR) has also stepped up its requirements for ensuring the integrity of data and its security especially when third parties are involved in conducting research. Such were a few of the reasons why investors thought of the announced move as the need of the hour. Furthermore, they added, the data sets have been getting more complicated such as in the case of mobile devices, financial transactions, biometrics, sensors, satellites, geo-location, social media, and exhaust data.
The recently announced strategy was also highlighted to be in line with the 2020 Examination Priorities that were recently released by the Office of Compliance Inspections and Examinations of the U.S Securities and Exchange Commission.
Corgentum Consulting’s Managing Partner Comments On The Announcement
According to Corgentum Consulting’s Managing Partner, Jason Scharfman:
“Investors want fund managers to utilize alternative data to enhance their investment research process. Corgentum’s survey results show that investors also increasingly recognize that with the use of these new data sets comes accompanying operational, compliance, and regulatory risks. Allocators are now beginning to tailor their due diligence processes and resources towards analyzing this growing research avenue.”