Reuters – Standard & Poor’s on Tuesday released enhanced criteria for rating hedge funds, a market segment expected to grow as investors and regulators press for greater transparency.<\/p>\n
The updated criteria include more quantitative analysis and more focus on operational risk, including such issues as trade processing and risk management, said Tanya Azarchs, a financial institutions credit analyst at S&P.<\/p>\n
S&P, a unit of the McGraw-Hill Cos. (MHP.N: Quote<\/a>, Profile<\/a>, Research<\/a>), is the latest credit ratings agency to attempt to make inroads into the lightly regulated hedge fund industry, which has grown to include more than 8,000 funds and $1 trillion in assets.<\/p>\n Moody’s Investors Service, a unit of Moody’s Corp. (MCO.N: Quote<\/a>, Profile<\/a>, Research<\/a>), last week completed its first public rating on the operations risk of a hedge fund, managed by Sorin Capital Management LLC.<\/p>\n Fitch Ratings, a unit of Fimalac SA (LBCP.PA: Quote<\/a>, Profile<\/a>, Research<\/a>) has also said it is exploring the possibility of expanding its ratings in the hedge fund industry in response to market demand.<\/p>\n “The due diligence process to assess the riskiness of a hedge fund investment is extremely in-depth and extremely time-consuming,” said Azarchs. “So there is an efficiency to having a credible intermediary perform that, and it can be used by all.”<\/p>\n