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13 Nov 2007

Hedge Funds More Proactive in Search for New Research

Hedge funds manage external research more proactively than long only managers, according to a study released by Integrity Research Associates. Hedge funds review their external research more frequently than long only investment managers, are three times more likely to seek assistance finding external research, and are much less confident that they have already found the best sources of external research.
“Our study confirms that hedge funds are more aggressively seeking out new sources of research than long only managers,” says Michael Mayhew, Integrity’s chairman and author of the study. “Long only managers are complacent about external research whereas hedge funds are continuously looking for what’s new and innovative.”

Conducted in October, 2007, the survey polled forty-three research directors at US based hedge funds and long only institutional investors. The survey focused on how institutional investors source and value external research. Highlights from the study include:

• Forty-two percent (42%) of hedge funds evaluate their portfolio of research providers at least monthly compared to five percent (5%) of long only managers.
• Hedge funds are three times more likely to use external sources to identify research, with forty-five percent (45%) of hedge fund research directors using outside sources compared to thirteen percent (13%) for long only directors of research.
• Thirty percent (30%) of hedge funds were either Not Too Confident or Somewhat Confident that they are using the best external research available compared to eighteen percent (18%) of long only managers.

“As long only managers introduce more alternative product like 130/30 funds, they are talking the talk, but our survey suggests that they are not yet walking the walk,” adds Mayhew.

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