This content is from: Corner Office

Standards Board Aims to Tackle Hedge Fund Issues (Before Regulators Do)

A new voluntary standards group for alternative investments is seeking to address the biggest issues facing the hedge fund industry in North America.

The Standards Board of Alternative Investments, which has created a framework for hedge fund transparency and governance, has launched a new group composed of representatives from institutional investors and hedge funds that will directly confront issues such as fees and best practices in North America.

The standards board, which has tackled such thorny subjects in the hedge fund industry as proper risk disclosures and the importance of transparency for investors, is a voluntary standards-setting body that has been an affiliate member of the International Organization of Securities Commissions since 2014.

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Senior representatives from the Alaska Permanent Fund, University of Southern California, Albourne Partners, Citadel, and Magnetar Capital, among others, have joined the committee. The group has approximately 200 managers and investors that are responsible for $3 trillion in assets.

“Investors clearly benefit from better practices, but I think managers recognize their value too, because they increase investor confidence and therefore make the industry more attractive,” said Dame Amelia Fawcett, chairman of the SBAI. 

"We're supporting the effort because we can engage with managers in a broader and more organized way on issues that are important to us," added Russell Read, CIO of the Alaska Permanent Fund and a member of the new committee.

In 2017, more than 1,000 participants from alternative fund managers and investors attended almost 20 roundtables that addressed big data and artificial intelligence, fee terms and structures, insider trading and responsible investing, and factor-based investing.

The standards group was created in the wake of the financial crisis to produce standards and best practices as a complement to public policy. Trustees of the SBAI include Fawcett; Bruce Cundick, chief investment officer of the Utah Retirement Systems; David George, deputy chief investment officer of public markets at Future Fund Australia; Kathryn Graham, head of strategy coordination at the Universities Superannuation Scheme; and Dale West, senior managing director at the Teacher Retirement System of Texas.

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