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But now the issue is due diligence of the GP, the fund manager. I think that's what OP is talking about. PE firms don't have the same level of disclosure requir
by pottertheotter 6y ago
But now the issue is due diligence of the GP, the fund manager. I think that's what OP is talking about. PE firms don't have the same level of disclosure requirements as public companies (with the exception of those that are now public companies), and you need to research a fund just as you would research a stock.
Fund investors are usually family offices, endowments, foundations, fund of funds, secondaries funds, etc., and they all do a huge amount of due diligence on prospective fund investments. It's just as much work to research funds as it is to research public equities.
For reference, I have been an investment professional at both a PE firm and a hedge fund.
- airstrike 6y agoBut similarly, to my knowledge only accredited investors may invest in PEs / HFs, and shares in those funds are special kinds of securities that differ significantly from those covered by SEC / blue-sky laws and therefore are not subject to the same disclosure requirements. It's not in anyone's interest to treat these different types of investments as if they were similar. I'm not in PE per se, but would think investment in one is through an investment contract which is an exempt security
- pottertheotter 6y agoTotally agree. Just if they are no longer for only accredited investors, there should be increased disclosure