Hedge Fund Standards Get Cold Shoulder From Funds, Investors

Nov 17 2008 | 9:04am ET

Just one in 10 British hedge funds will definitely adopt best-practices standards promulgated last year by a group of top firms, a new study shows. The revelation is not likely to make regulators happy, as fingers of blame for the financial crisis continue to point at hedge funds.

A survey of 100 hedge funds by Kinetic Partners shows that two-thirds of hedge funds in the U.K. say they aren’t sure they will adopt the self-regulatory regime of the Hedge Fund Standards Board. Fully one-fifth of hedge funds say they will definitely not adopt the standards.

More worrying still, there seems to be very little demand on the part of hedge fund clients for the greater compliance with the voluntary code, which calls for, among other things, tougher standards for asset valuation, third-party valuation and a Chinese Wall between valuation and portfolio management. Not a single fund interviewed by Kinetics said that they had been asked by investors to adopt the code, despite the difficulties faced by hedge funds in recent months.

“It is alarming that no hedge funds had been contacted by their investors regarding the standards,” Julian Korek of Kinetics said.

The HSFB code also codifies best practices on disclosure, governance, risk and shareholder conduct.

Approximately 30 firms, including the original 10 that crafted the standards, have adopted the HFSB code. Anotion Borges, who heads the Hedge Fund Standards Board, the self-regulatory group set up by the HFSB, said he expects at least 100 more to adopt the standards soon.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Top 5 Predicted Outcomes Of CalPERS' Hedge Fund Divestment

Sep 22 2014 | 8:35am ET

CalPERS’ announcement to divest of hedge funds has created a significant buzz...

 

Videos

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.