Non-Profit Investor Group Publishes ‘Hedge Fund Principles’ Guide

Dec 2 2014 | 3:56pm ET

The Alignment of Interests Association, a non-profit investor-driven organization, today released Hedge Fund Principles, a set of guidelines aimed at creating increased investor-manager alignment in the asset class.

Since 2009, AOI has worked to advance the level of communication between institutional hedge fund investors, by facilitating the sharing of ideas on ways to improve the industry for the long-term benefit of all its participants. Its mission is to foster investor collaboration, provide an independent forum for the exchange of ideas and contribute to the sharing of educational resources among investors. AOI’s participation is generally limited to investors, allowing its members to approach issues from their shared perspective.

AOI’s Hedge Fund Principles have been developed by its 15-member investor steering committee, comprised of leading institutional investors in hedge funds, including pensions, foundations and endowments.

“The Core Principles for the Alignment of Interests Association are a tremendous milestone in fostering industry best practices while providing a more effective alignment of interests between hedge fund managers and investors. The integrity of the investment business and its effectiveness as stewards of capital in the future is largely dependent on reasonable standards of conduct,” said Sharmila Kassam, deputy chief investment officer of the Employees Retirement System of Texas.

Anne-Marie Fink, chief investment officer of the Employees’ Retirement System of Rhode Island added, “AOI’s Hedge Fund Principles are a great way for us to work together with other investors and with managers to improve terms, governance and transparency. Their release also presents an excellent opportunity for investors to initiate thoughtful discussions with their managers.”

Through its investor-driven platform, AOI has evolved along a path similar to that of the Institutional Limited Partner Association, an association for institutional investors in private equity funds that released Private Equity Principles in 2009 that resulted in an industry-wide reexamination.

“The ILPA and AOI share a common mandate to advance the interests of investors through education, independent research and investor collaboration” said Kathy Jeramaz-Larson, executive director of ILPA. “There are considerable overlaps between the constituencies of each organization; so it would make sense for the two organizations to support each other’s efforts that contribute to the strengthening of both asset classes.”

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