After years of complaining about high fees and lackluster returns, hedge fund investors have something new to grumble about: It is getting harder to see even the most basic data about what's happening with their money.
Big-name hedge funds like Third Point Capital, Paulson & Co, Pershing Square Capital Management, and Eton Park Capital Management have made it tougher for investors to see fund performance, using complex password-protected websites and putting in settings that forbid things like printing, forwarding, and copying and pasting.
The shift comes as hedge fund managers increasingly seek to shield their big bets and inner workings from rivals.
But for investors in hedge funds, including investors who write reports to their own clients, the restrictions are a pain that eats up valuable time navigating the multilayered sites and then retyping the data that they eventually find.
"I'm giving them money to invest, and they are making it nearly impossible for me to see what they did with it," complained one fund of funds manager who allocates billions to hedge funds. He asked not to be identified for fear of angering the managers he works with.
"Their websites are like trying to break into Fort Knox, and it is frustrating," he added.
Daniel Loeb's Third Point, one of the industry's top-performing and most widely watched firms, was among the most recent to migrate. The hedge fund company started using software called IntraLinks at the end of 2013 to tell clients how its $14 billion in assets under management fared.
IntraLinks, which counts roughly 500 hedge funds among its users, last year launched a new cloud-based investor communications platform, IntraLinks Investor Portals, designed specifically for hedge funds and private equity managers. IntraLinks also offers user access reports, letting fund managers see who looked at the sites and when.
While popular with hedge fund managers, investors have complained that IntraLinks is tough to navigate and clunky.
A Third Point spokeswoman said the move brought it into line with the industry standard.
Loeb, whose flagship fund gained 4.4 percent last month, used to be among the most free with information about his firm, sending out emails describing performance and the firm's winners and losers to a broad swath of people, including many who had no money with him but might be prospective clients.
The firm does still disclose some information publicly but is careful to give its investors more on IntraLinks.
"Managers have become increasingly opaque, in particular activist managers," noted one Third Point investor, who asked not to be identified for fear of angering the firm. "And this is one of the frustrations in covering these managers."
Even firms that don't use IntraLinks have put in restrictions on sharing documents, investors and fund managers alike said. To fund managers the moves are designed to align their interest with clients and protect the proprietary nature of their portfolio, several said.
For professional investors working in an industry already considered highly secretive, managers' newfound ways to make it difficult to see their data is touching a raw nerve, in part because investors poured in so much money in the last decade. Hedge fund assets grew to $2.6 trillion from $460 billion in 2000.
Erik Gordon, who watches hedge funds as a professor of law and business at the University of Michigan, said complaints about funds becoming more secretive are piling up.
But he noted it is the winners, not the losers, who are clamming up most. For example, William Ackman's Pershing Square sends out an email with a link to let only registered users view the numbers. After badly trailing the Standard & Poor's more than 30 percent gain with a 9.7 percent return last year, Ackman has reason to broadcast this year's 11.7 percent return as he trounces the broader market and average hedge fund's 1.5 percent gain. A spokesman declined to comment.
"Investors want to know what is going on in the funds they have their money in but tread lightly because they don't want to be denied access to hot managers' new funds," Gordon said.
To be sure, there are reasons hedge fund managers want to be circumspect about their strategies, fearing any whiff of information could tip off rivals. And many investors compromise by agreeing not to keep hard copies of documents or sign non-disclosure agreements if they want to know what kind of a big bet an activist firm is building, for example.
"There are legitimate interests on both sides, and a balance needs to be struck," said Michael Rosen, chief investment officer at Angeles Investment Advisors.
But he adds, "having a manager say 'Just trust me' is not acceptable."
