SEI Survey: Investors' Continued Commitment to Hedge Funds Comes With Rising Expectations

Institutions Look Beyond the Numbers as Transparency and Liquidity Risk Surpass Performance as Top Concerns Facing Hedge Fund Managers

DUBAI, United Arab Emirates, January 25 - In the wake of the investment scandals, market dislocations, and
regulatory scrutiny of the past year, transparency and liquidity risk have
surpassed poor performance as the top concerns for institutional investors
investing in hedge funds, according to a global survey report released today
by SEI (Nasdaq: SEIC) in collaboration with Greenwich Associates. The survey
report, entitled "The Era of the Investor: New Rules of Institutional Hedge
Fund Investing," points to a need for hedge fund managers to institutionalise
responses to transparency demands and to demonstrate clear sources of alpha
to retain and gain assets among an increasingly demanding institutional
investor base.

The survey revealed a continued commitment to hedge fund investing among
institutions as nearly 80 percent of all survey respondents said they have no
plans to change their hedge fund allocations in the next 12 months, while 15
percent expect to increase their allocations. What will change is their
demand for transparency. Over 70 percent of respondents reported requesting
more detailed information from managers than they did a year ago. While the
type of information sought ranged from counterparty and leverage exposure
data to sector and position-level detail, over 80 percent of the respondents
reported a focus on funds' valuation methodologies. Investors also continue
to exert influence on fee structures, as nearly one in five respondents
reported negotiating fee arrangements different than the standard "2 and 20"
for single-manager funds and "1 and 10" for funds of hedge funds over the
last year.

"Investors remain committed to hedge funds but that commitment comes with
increased expectations," said Phil Masterson, Managing Director for SEI's
Investment Manager Services division. "The balance of power has clearly
shifted and managers must meet the growing demand for transparency and
increase their focus on operational effectiveness if they want to be
successful in this 'Era of the Investor.'"

With respect to manager selection, institutional investors are even more
focused on a manager's ability to identify and clearly explain the alpha
source from which the performance is derived. Another critical factor in
manager selection was compliance infrastructure, with nearly 50 percent of
respondents citing it as "very important." Independent administration and a
separation of investment management and operations management roles were also
identified as high-ranking factors in manager selection.

For hedge fund managers, the survey clearly points to the need to focus
on the fundamentals as they face greater scrutiny and demands from investors.
The survey reveals that investors are concerned with issues such as liquidity
risk, valuation methodology, and whether performance characteristics are in
line with stated strategies. It also points to institutional investors'
willingness to look beyond short-term performance and focus on other
traditional indicators of quality, such as a firm's management team,
investment process, and operations and compliance infrastructure.

For fund managers to remain competitive, the survey emphasised the need
for firms to proactively enhance their transparency and investor
communications and reporting. Fund managers also have an opportunity to add
value by helping educate the investment committees and boards of
institutional investors, given that investors cited that as their second
greatest challenge.

The white paper is published by the SEI Knowledge Partnership, which
provides ongoing business intelligence to SEI's investment manager clients.
To request a copy of the 17-page white paper, please visit
www.seic.com/NewRules.

About SEI's Investment Manager Services Division

SEI's Investment Manager Services division provides comprehensive
operational outsourcing solutions to global investment managers focused on
mutual funds, hedge and private equity funds, exchange traded funds,
collective trusts, and separately managed, as well as institutional and
private client, accounts. The division applies operating services,
technologies, and business and regulatory knowledge to each client's business
objectives. Its resources enable clients to meet the demands of the
marketplace and sharpen business strategies by focusing on their core
competencies. The division has been recognised by Buy-Side Technology as
"Best Fund Administrator" and by HFMWeek as "Best Funds of Hedge Funds
Administrator." For more information, visit
www.seic.com/enUK/investment-managers.htm.

About SEI

SEI (Nasdaq: SEIC) is a leading global provider of outsourced asset
management, investment processing and investment operations solutions. The
company's innovative solutions help corporations, financial institutions,
financial advisors, and affluent families create and manage wealth. As of
September 30, 2009, through its subsidiaries and partnerships in which the
company has a significant interest, SEI administers US$383 billion in mutual
fund and pooled assets and manages US$156 billion in assets. SEI serves
clients, conducts or is registered to conduct business and/or operations,
from numerous offices worldwide. For more information, visit
www.seic.com.

About Greenwich Associates

Greenwich Associates is the premier strategic consulting and research
source for providers and users of institutional financial services worldwide.
Founded in 1972, Greenwich provides institutional financial services firms
and those who participate in its research with accurate, systematic
management information that helps them meet their global business needs. For
more information on Greenwich Associates, please visit www.greenwich.com.

Services provided by SEI Investments - Global Fund Services Limited (Reg.
in Dublin No. 424309), SEI Investments Trustee & Custodial Services (Ireland)
Limited (Reg. in Dublin No. 315393), and their affiliates, which are all
wholly owned subsidiaries of SEI Investments Company.

SEI Investments - Global Fund Services Limited and SEI Investments
Trustee & Custodial Services (Ireland) Limited (Styne House, Upper Hatch
Street, Dublin 2, Ireland) are authorised by the Financial Regulator under
the Investment Intermediaries Act 1995.

This material is not directed to any persons where (by reason of that
person's nationality, residence or otherwise) the publication or availability
of this material is prohibited. Persons in respect of whom such prohibitions
apply must not rely on this information in any respect whatsoever.

Dana Grosser of SEI, +1-610-676-2459, dgrosser at seic.com, or Media, Katy Hall of Penrose Financial, +44-0207-786-4888, katyh at penrose.co.uk