EUROPE - Lobbying by pension funds for independent valuation of hedge funds has fuelled a hiring spree for back office staff, research suggests.
PricewaterhouseCoopers' study Infrastructure: From Cost to Benefit, said valuing fund assets, particularly illiquid holdings, was "a critical area where investors and regulators desire objectivity".
As a result, due diligence by investors such as pension funds was becoming "more rigorous, more intrusive and more time-consuming, seeking to understand the precise roles in valuing assets, as well as details of service level agreements".
Europe's forthcoming Alternative Investment Fund Managers Directive stipulates independent valuation, while allowing in-house valuation if valuation teams are independent of portfolio managers.
Meanwhile, America's SEC expects independent judgement be exercised in valuing and pricing portfolio assets, PwC said.
"Having a strong and robust infrastructure is becoming a prerequisite for raising assets," the firm added.
Intensive searches for back office staff already doubled base pay for such experts in Europe over recent years, the report noted.
About 65% of respondents said they were seeking back office staff, while half noted they were not keenly seeking fund managers.
Compliance and risk management have been two areas where recruitment in the UK was heaviest, with over 90% of respondents saying they are ‘active' or ‘very active'.
"Competition for high-quality tax, risk and compliance staff is rising, demonstrating the importance of having experienced people with good credentials," PwC's report said.
"At a time when hedge fund investors, legislators and regulators are seeking improved governance, controls and transparency, strong infrastructure is critical."
Tim Sharp warns the DWP's plans for collective DC risk establishing an inhospitable environment for the lay trustee
This week's edition of Professional Pensions is out now.
The government is in talks with the UK and Irish pensions regulators over how to protect members of cross-border schemes in the event of a no-deal Brexit.
The equalisation of guaranteed minimum pensions (GMPs) is at least two years away from being completed, and could take longer than four years for some schemes, a poll has found.