GP transparency and tech: room for improvement

According to new figures, a majority (69%) of LPs were ‘moderately satisfied’ with the technology capabilities of the GPs they currently invest with. 

SS&C IntraLinks’ 2022 LP Survey found that only 20% of investors were ‘very satisfied’ with managers’ tech capabilities, while 10% weren’t satisfied.

According to a UK-based fund of funds, which contributed to the report, GPs’ data capabilities are improving all the time. “We expect our GPs to focus on and invest in this area, and we are broadly impressed with the ongoing evolution we are seeing,” they said.

Transparency

Almost half (45%) of LPs rated the level of transparency provided by GPs as average, meaning there is room for improvement.

The majority (56%) of LPs said communication could be improved, while three-quarters rated transparency levels as either ‘average’ or ‘above average’ 

GP relationships

When asked what would help to improve their relationships with GPs, 30% of LPs said better reporting analytics, while around 18% of respondents said standardised reporting such as ILPA templates.

At the same time, more than half (around 55%) of LPs said that more frequent conversations with portfolio managers would improve their relationship with managers.

On the flip side, less than 10% said social media platforms such as LinkedIn would help to improve their relationship with GPs.

Outsourcing

When asked if they prefer their fund managers to outsource their back office functions to a fund administrator, nearly half (47%) said it depends on a case-by case basis. A further 38% of LP respondents said yes, outsourcing is their preference. 

On the flip side, only 15% said they have no preference on whether a fund manager handles back office functions in house.

ESG

When asked if they would divest from a manager if they weren’t willing to show them their updated ESG policy on an annual basis, only 10% said they’d very likely divest. Similarly, less than 20% said they would highly consider it.

On the flip side, less than 30% said they wouldn’t divest from a manager on this basis, while 20% said they’d probably not consider divesting.

At the same time, more than 30% of LP respondents remained neutral to the matter, stating it would not sway nor deter them from divesting.

“Divesting may not be practical,” commented Alex Lesch, partner, investment strategy and risk management at Adams Street. “We evaluate our managers’ exposure, approach and ESG considerations given their specific ESG risks and concerns to ensure that ESG is integrated across the investment lifecycle, as appropriate to their investments.”

SS&C Intralinks’ survey received responses from 199 global investors, including family offices (32%), fund of funds (21%) and investment consultants (19%). Of those surveyed, 45% were from North America, 35% came from EMEA and the remaining 20% from Asia Pacific and Latin America.