Reporting throws up challenges

The complexity of hedge fund investments poses a challenge for analysis as required by adequate and comprehensive disclosure of returns. Although some of the key elements of hedge fund reporting can in principle easily be captured by appropriate indicators, others are of a much more qualitative nature and are thus harder to formalise.

In an illustrative example, Foster and Young1 show why detailed hedge fund reporting is indispensable and difficult to achieve. They consider a hedge fund manager