Correct valuations of portfolios are essential if investors are to get information about their exact returns and, on the basis of this, the compensation that their managers should receive. The surveys, by Deloitte and by Horizon Cash Management, point to the need for more work in the area of valuation.
According to the Deloitte survey of 60 managers worldwide, only 47% reported that they used a third party to provide independent pricing valuations. If managers receive compensation based on valuations, conducting valuations purely in house obviously raises questions about conflicts of interest. “There is a growing trend towards checking valuations using an independent administrator. However, for hard-to-value assets, often the manager is the best to do so,” says Barry Kolatch,...
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