Private equity and hedge fund managers have yet to take advantage of the loosening of marketing restrictions in the JOBS Act signed by President Barack Obama in April 2012, according to a survey by Preqin.
The survey of 85 hedge fund managers and 65 private equity managers reveals only 5% of private equity managers and 4% of hedge fund managers have registered to market under the Jumpstart Our Business Startups Act.
The primary barriers to marketing are additional cost and an overall hesitancy to be the first manager to market.
Forty-two percent of hedge fund managers and 24% of private equity managers cited additional cost, while 21% of hedge fund managers do not want to be the first to market. Among private equity managers, 22% cited potential conflicts with the European Union's Alternative Investment Fund Managers Directive, 20% cited increased Securities and Exchange Commission scrutiny and 20% cited a negative perception of marketing.
“There is definitely no rush to jump and start registering under the rule that allows you to promote funds more widely,” said Amy Bensted, head of hedge fund products at Preqin, in a telephone interview. “It's definitely a story of the short-term conservative nature of the industry, but long term it could be taken up more widely.”
