Hedge fund directors don’t get much respect these days.
Corgentum Consulting, a provider of hedge fund operational due diligence reviews and background investigations, reported last week that 73% of investors and operational due diligence analysts surveyed felt directors did not serve a useful function.
Worse, 76% said directors did not provide true independent oversight of funds.
“Offshore jurisdictions and fund directors have an ongoing public relations problem when it comes to investors,” Corgentum managing partner Jason Scharfman said in a statement.
Competent hedge fund directors can add value to the overall governance of a fund, Scharfman said, but many investors viewed them simply as an extension of the fund itself.
“Compounding the problems, 62% of the group surveyed felt directors didn’t have much credibility with fund managers,” he said.
Corgentum conducted the survey as part of its 2014 webinar series. Respondents represented operational due diligence analysts and hedge fund investors, ranging from ultrawealthy individuals and family offices to pensions, endowments, banks and insurance companies.
The survey also found investors and operational due diligence professionals at odds over how many directorships were appropriate.
Approximately 31% thought that the number of fund directorship positions should be capped at 15, while 24% wanted a nine-directorships cap.