Standards set for hedge fund industry
UK - Best practice standards for hedge fund managers are likely to receive endorsement from pension consultants, according to Man Group deputy chairman Stanley Fink.
The Hedge Fund Working Group (HFWG) today published the standards which include recommendations for managers to adopt an independent process for valuing portfolios and to put in hand robust governance of funds. In each case this is to handle conflicts of interest between managers and investors.
The report also recommends enhanced disclosure to investors and a comprehensive framework to manage risk. Compliance will be voluntary and will operate on a 'comply or explain' basis.
Man Group was one of 14 hedge fund managers who formed the HFWG, chaired by Sir Andrew Large.
Fink said consultants had been involved the late stages of the development of the standards, and had shown their support.
He said the document was a way of documenting practices that were already commonly used in the industry.
"When pension fund trustees invest in a hedge fund, they should look to see whether those hedge funds conform to these standards," he said.
"If a UK-based hedge fund manager doesn't join, pension fund trustees should be asking themselves why."
Sir Large, chairman of the HFWG, said a measure of success for the standards would be the extent to which hedge fund managers in other countries signed up.
He said: "There will be healthy pressure for a cooperative globalisation of best practice standards through convergence where it is possible and desirable in terms of industry practice, and is not constrained by regulation, law or indeed legitimate difference of business approach."
The Alternative Investment Management Association (AIMA) welcomed the publication of the standards, claiming it represented a substantial undertaking by leading hedge fund managers and offered high-level thought leadership on key issues surrounding the industry.
Andrew Baker, deputy chief executive of AIMA, said: "We believe this initiative is the right approach for the hedge fund industry."
Angus Murray, CEO of fund manager Castlestone Management, agreed: "Hedge funds should be welcoming this report.
"Castlestone already works to a code of transparency, honesty and the best possible business standards, and we expect that all hedge fund managers will take steps to adjust to the changing needs of investors and regulators."
The report also recommends enhanced disclosure to investors and a comprehensive framework to manage risk. Compliance will be voluntary and will operate on a 'comply or explain' basis.
Man Group was one of 14 hedge fund managers who formed the HFWG, chaired by Sir Andrew Large.
Fink said consultants had been involved the late stages of the development of the standards, and had shown their support.
He said the document was a way of documenting practices that were already commonly used in the industry.
"When pension fund trustees invest in a hedge fund, they should look to see whether those hedge funds conform to these standards," he said.
"If a UK-based hedge fund manager doesn't join, pension fund trustees should be asking themselves why."
Sir Large, chairman of the HFWG, said a measure of success for the standards would be the extent to which hedge fund managers in other countries signed up.
He said: "There will be healthy pressure for a cooperative globalisation of best practice standards through convergence where it is possible and desirable in terms of industry practice, and is not constrained by regulation, law or indeed legitimate difference of business approach."
The Alternative Investment Management Association (AIMA) welcomed the publication of the standards, claiming it represented a substantial undertaking by leading hedge fund managers and offered high-level thought leadership on key issues surrounding the industry.
Andrew Baker, deputy chief executive of AIMA, said: "We believe this initiative is the right approach for the hedge fund industry."
Angus Murray, CEO of fund manager Castlestone Management, agreed: "Hedge funds should be welcoming this report.
"Castlestone already works to a code of transparency, honesty and the best possible business standards, and we expect that all hedge fund managers will take steps to adjust to the changing needs of investors and regulators."
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