04 Sep 2017

Administrator Transparency Reporting

Overview of the key considerations for investors and illustration of ATR content

As part of due diligence on alternative investment funds, institutional investors require independent confirmation on a number of items to verify the net asset value, evaluate the pricing sources used, and assess the diversification and quality of counterparties. This due diligence helps address investor concerns on misappropriation of funds, strength of valuation processes, and counterparty risk. The ATR provides a tool for investors to better understand specific risk factors and focus conversations between investors and asset managers on the relevant risks.

Examples of issues that the ATR can help flag during due diligence include:

  • Significant exposures to a single counterparty
  • Increasing levels of less liquid assets
  • Increasing number of assets being priced by the asset manager
  • Changes in the amount of assets and liabilities that have not been independently verified

The ATR provides transparency on the fund’s net asset value, confirmation of the fund’s assets and liabilities, verification of pricing sources, counterparty exposures, fair value hierarchy, and (optionally) related party co-investment in the fund.

This memo details some of the key considerations for investors when using this reporting and provides an illustration of the contents of the ATR.