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Aima updates hedge fund valuation guide
09 October 2013
The new version of the Guide to Sound Practices for Hedge Fund Valuation takes into account recent reforms
hedge fund valuation
The Alternative Investment Management Association (Aima) has updated its Guide to Sound Practices for Hedge Fund Valuation to take into account recent regulatory reforms.
The new version includes a summary of valuation requirements under the Alternative Investment Fund Managers (AIFM) directive.
It also takes into account changes in accounting standards such as the introduction of new international guidance on and disclosures of fair value accounting.
The guide was produced by a committee of volunteers from the industry and was co-chaired by Declan Quilligan, managing director, Citco Fund Services, and Olwyn Alexander, European hedge fund leader, PwC.
Aima CEO Andrew Baker said: “New accounting standards, greater demands from investors for transparency and the post-crisis regulatory reforms are changing the way that managers, administrators and other valuation specialists manage and approach valuation.
Quilligan said there has been a shift away from self-administration of hedge funds to independent administration.
He added: “This evolution suggests that sound practices promulgated within the guide such as independence and greater transparency that are increasingly espoused by institutional investors will continue to drive change.
"Investors and other stakeholders should feel more comfortable that the adoption of sound practices together with enhanced regulatory frameworks offers greater investor protection than before.”
The guide contains 16 recommendations that reflect industry sound practices within the areas of governance, transparency, procedures, processes and systems, in addition to sources, models and methodology. It also sets out the areas of hedge fund valuation that are now covered by regulation and those where discretion still applies.
Alexander said: “Since the second version was released in spring 2007, there has been convergence in the world of accounting standards, but we have also experienced divergence in the regulatory sphere, and this new edition of the guide reflects those changes.
"In addition, the extreme illiquidity experienced during the financial crisis gave rise to some unique valuation challenges which are now addressed in the recommendations and ensuing guidance.”