The Alternative Investment Management Association (AIMA), the global hedge fund association, has published a guide for investors and managers, written by members of AIMA’s Investor Steering Committee (ISC), that reflects preferences and priorities for institutional investors and investment allocations.
The aim of the guide is to outline investor views, expectations and preferences on a variety of important operational and organisational issues, which are increasingly the focus of due diligence reviews and discussion among investors and fund managers.
The authors of the guide are Kurt Silberstein (CalPERS), Luke Dixon (USS), Michelle McGregor Smith (BA Pension Investment Management), Andrea Gentilini (UBP), and Adrian Sales (Albourne Parners). AIMA’s ISC is jointly chaired by current AIMA Chairman Todd Groome and former AIMA Chairman Christopher Fawcett of Fauchier Partners.
AIMA Chairman Todd Groome said: “AIMA is very pleased to sponsor this paper, outlining institutional investor views regarding a number of important areas of operational and organisational ‘infrastructure’, which are receiving increased industry focus. AIMA has supported and provided publications related to a wide variety of educational guides and best practices throughout its 20-year history. In light of the ongoing ‘institutionalisation’ of the hedge fund industry and the growth of institutional investor participation, we hope that this paper, authored by some of the most influential investors and advisors in the industry, will be a useful reference guide to both investment managers and investors in hedge funds.”
The paper, entitled A Guide To Institutional Investors’ Views And Preferences Regarding Hedge Fund Operational Infrastructures, begins with a discussion of “Governance”, authored by Luke Dixon of Universities Superannuation Scheme (USS), which outlines the fundamental importance of good governance, key constitutional documents and the role of boards of directors.
The second section focuses on “Risk” and is authored by Andrea Gentilini from Union Bancaire Privee (UBP). It focuses on a variety of reporting practices concerning the investment portfolio, operations, counterparties and liquidity.
The third section, covering “Investments”, is authored by Kurt Silberstein of the California Public Employees Retirement Scheme (CalPERS) and discusses performance reporting, terms and conditions, control of assets, and transparency.
The fourth section addresses “Capital” and is authored by Michelle McGregor Smith of British Airways Pension Investment Management. It discusses issues related to a firm’s ownership structure, investor relations, and related sales and marketing activities.
Finally, the fifth section, “Operations”, authored by Adrian Sales of Albourne Partners, focuses on a variety of operational issues, including valuation, business continuity planning, compliance and relationships with service providers.