Hedge funds that hook investors on the basis of a well-known ‘star’ portfolio manager may attract capital in the short term, but the shine can wear off, finds a new study by Ernst & Young.

An overwhelming 80% of Asian hedge funds believe investor loyalty lies mainly with the firm’s founding principal, a sentiment matched by only 35% of counterparts in Europe and 48% in the US, according to the Coming of Age global hedge fund survey. By comparison, only 41% of investors say they put loyalty with a fund’s founding principal.

“Investors may look for the star manager for short-term performance, but for long-term performance and for the longevity of their investment portfolio, it may well be that they don’t want the star culture," says Roy Stockell, head of asset management Asia-Pacific at Ernst & Young.

“There is evidence to suggest that it is counterproductive [for hedge funds]," he adds. “If you look at longevity and consistency of performance, it tends to come from firms without a star-manager culture.”

The culture is pervasive in Asia, where some of the biggest domestic hedge fund launches in the past two years have been headed by so-called star managers who have built a track record at other organisations before setting up on their own.

One example is former Goldman Sachs proprietary trader Morgan Sze, who so far has raised about $2 billion for his Azentus Global Opportunities Fund, which began trading this April.

Asia’s less mature hedge fund industry was likely to account for the difference in attitudes between regions, according to the poll of 92 hedge funds globally, which represent about $600 billion in assets under management, and 42 investors in North America, Europe, Middle East and Africa with over $130 billion allocated to hedge funds.

No investors from Asia were polled, although there are plans to include them in future surveys, says Stockell.

The findings show marked differences between hedge fund and investor attitudes. “The most striking thing is the discrepancy between what the investors perceive to be important and what the fund managers perceive to be important,” adds Stockell.

In certain areas of governance, Asian hedge funds are ahead of their US counterparts, with 75% of managers in the region believing that independent boards were important, against the 46% by their peers in America and 90% in Europe. Their opinions are mismatched with investors, with 64% in the US and 71% in Europe deeming independence as vital.

“Investor loyalty isn’t necessarily aligned directly to performance anymore,” says Stockell, “because after the crisis in 2008, a lot of people were burned by the lack of liquidity and transparency.”

Investors who decided not to award mandates to certain hedge funds cited governance-related issues, including concerns about risk management policies, inconsistency of available information and lack of an independent board, according to the survey.