Almost 40% of U.K.-based asset owners are not investing in hedge funds due to high management fees, according to Asset Management Exchange, the investment platform of Willis Towers Watson.
The AMX survey of 200 investment executives at U.K. pension funds showed that a third of investors considered hedge fund investing to be hindered by insufficient risk reporting. Some 26% had difficulty comparing fund performance and 25% had no control over funds' governance.
More than a third of the investment officers also said non-transparent additional costs associated with hedge funds stopped them from investing.
The survey also found that investment officers at pension funds are expecting increased scrutiny from pension fund boards about hedge fund fees, costs incurred and the security of assets in hedge fund investments.
"In addition to increased scrutiny surrounding costs and fees, security and risk are also key areas of concern when it comes to investing in hedge funds," Oliver Jaegemann, global head of AMX, said in a news release.