Hedge Fund Valuation Services
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The Hedge Fund Standards Board states that a hedge fund manager should ideally operate a valuation function which is segregated from the portfolio management function, and also that the fund should :
"... employ the services of an appropriate external party to evaluate the effectiveness and robustness of the valuation procedures in place and report to the fund governing body (or its valuation committee)."
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Hedge Fund valuation is a complex and controversial subject and is likely to be subject to more formal regulation in the relatively near future. Our practice is heavily involved in this process, providing specialist support and advice to a number of policy makers, trade associations, standards setters and regulators looking to further develop hedge fund valuation principles.
The central position of valuation in much of the controversy over hedge funds is illustrated by the attention paid to the subject by regulators and industry associations. There are a series of voluntary ‘sound practice’ recommendations proposed for valuation policy and procedures by the Hedge Fund Standards Board, AIMA, the MFA and IOSCO.
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As an independent and specialist consulting practice focused exclusively on valuation, we offer a range of services to help hedge funds meet the HFSB recommendations and comply with this ‘sound practice’. These include :
* Full Valuation Process Review designed to certify compliance;
* Assistance with the creation and ongoing review of a fund’s Valuation Policy Document;
* Independent due diligence on Third Party model and valuation sources;
* Ongoing work with and advice to Valuation Committees.
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The primary objective is to produce a certification from independent experts that the fund’s valuation policies and procedures conform and comply with ‘sound practice’ principles. In our experience, rather than being an onerous bureaucratic overhead, the creation and maintenance of a robust, transparent and justifiable valuation process assists a hedge fund in both reassuring existing stakeholders and making the fund more attractive to external investors. In addition, the process aids with independent financial audits and helps to position the fund to meet any formal regulatory oversight if – or more likely, when – this occurs.
In addition, one attractive by-product of this review derives from our in-depth knowledge and experience of third party valuation data and model sources. We have frequently been able to help funds to rationalize the significant expense incurred in subscribing to these sources by using more appropriate methods or striking better commercial deals. In many cases, the ongoing costs saved far outweigh the one-off fee for the service!
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You can download a copy of our Hedge Fund Valuation Services literature by clicking on the link on the left. This document provides more information on our services and the benefits that they bring to Hedge Funds.
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