No one will likely be shocked to hear that investors weren’t overjoyed with hedge fund transparency even before the Madoff affair.  This is the headline finding of a survey conducted last fall and released on Friday by French research institute Edhec-Risk Asset Management Research Centre.  But the 72-page study based on the survey of European institutional investors also reveals some more interesting findings.

Hedge fund investors say operational risk reporting is relatively unimportant…

While a wide gap exists between the importance placed on operational risk reporting by hedge fund managers and investors, investors actually value other types of reporting much more than they do operational risk reporting.

The chart below from the report shows that investors are totally unimpressed with current operational reporting.  But note that they also value “operational risk” reporting less than all but one other form of reporting (that being reporting on the manager’s “qualitative outlook”):

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