Robert Thorpe, Cazenove Capital Management's director of UK advisory sales, says: "The Cazenove Absolute Target Return fund is a UK fund. We invest 95 per cent of its investment in the top 350 companies and 5 per cent in smaller companies but it is all UK only."
Thorpe says he thought it would be "unlikely" that any other UK-based absolute return funds, such as the BlackRock UK Absolute Alpha Return fund, would have any exposure to
Madoff’s funds.
Collins Stewart also says that its
Guernsey-domiciled absolute return fund has no Madoff exposure.
Nick Maunder, a Collins Stewart Absolute Return fund analyst, says: "I know the fund's manager Martin Baxter has looked into the Madoff fund before but dismissed it pretty quickly. He decided that things just didn’t add up in his mind on how Madoff were getting the returns with the strategy they were using."
Scottish Widows also announced that the
SWIP Absolute Return Bond has no exposure to Madoff.
Rick Di Mascio, CEO and founder of
Inalytics, a specialist manager evaluation firm, believes the scandal highlights what he calls the "fundamental lack of transparency within the hedge fund industry."
He says: "The willingness of the industry to accept this state affairs, whether tacit or overt, can and must change. This is a major event and needs to shock everyone into action.
"This situation stems from the lack of information and evidence that investors are provided with. For too long it's been an unwritten industry rule that senior management will leave individual managers alone to ply their trade without answering to any higher power and without needing to provide disclosure.
"As a result, some hedge fund investors have had to resort to ridiculous methods such as employing detectives or investigators to try and establish what is going on – this surely cannot be right," Mascio adds.
The alleged fraud has pointed to a "systemic failure" and raised "fundamental questions" about the regulatory structure in the US, according to
Bramdean Alternatives' CEO Nicola Horlick. The UK-listed fund has $25m invested with Madoff.
In a statement Antonio Borges, chairman of the
Hedge Fund Standards Board, says: "The Madoff scandal highlights just how important it is to have independence of process in relation to administration of the fund and the valuation process. It also highlights the need for robust governance practices and oversight via independent boards, which will challenge management procedures and behaviour.
"The
hedge fund standards are designed to address exactly these issues to help prevent such events from happening, and to provide investors with the necessary transparency. This is why an
increasing number of managers are signing up to the HFSB standards."