Standard & Poor’s expects to launch a hedge fund risk rating system before the end of the year, the Financial Times reports. The S&P ratings would, among other things, evaluate how creditworthy hedge funds and their managers are, as well as determine the likelihood a hedge fund would default on its obligations, such as a loan or derivative contract. Included would also be ratings on operational risk and performance as it affects liquidity. S&P is not the only agency working on a hedge fund risk rating system. Moody’s Investors Service and Morningstar reportedly are in the process of developing their own versions. The timing seems just right as a growing number of institutional investors are pouring more money into the industry – and demanding more transparency, even as hedge funds are making more moves to attract those deep-pocketed clients. According to S&P’s Tanya Azarchs, the ratings will also appeal to prime brokers, fund of funds managers and equity investors.