Tuesday, May 31, 2011

Guide to Institutional Investors’ Views and Preferences Regarding Hedge Fund Operational Infrastructures


The Alternative Investment Management Association (AIMA) has written a guide for investors and managers aimed at highlighting preferences and priorities for institutional investors.

The guide is called  A Guide To Institutional Investors’ Views And Preferences Regarding Hedge Fund Operational Infrastructures” outline the views and preferences on a number of operational and organizational issues which are increasingly become the subject of due diligence reviews.  The paper is divided into 5 sections.  I will list the contents of the sections below and starting tomorrow I will abstract each section.  Investors are organizing and will have a large impact on how the hedge funds will be organized in the future.   

As an example the guide, recommends that hedge funds issue voting units so investors have a say on material changes or events in the hedge funds.  More to come tomorrow.  Keep reading    


GOVERNANCE

Relevance
Board of Directors

RISK

Reporting
Portfolio Risk
Operational Risk
Counterparty Risk
Liquidity risk

INVESTMENTS

Performance
Terms
Economics
Control of Assets
Transparency

CAPITAL

Firm Ownership
Fund Investors
Investor Relations
Sales and Marketing

OPERATIONS

Organization and Control Environment
Corporate Structure
Oversight and Reporting Lines
Separation of Duties

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