AIMA Issues Revised Hedge Fund Guidelines

by Carla Johnson, Investors Offshore, London

25 May 2007

Although hedge fund associations are rejecting calls for an industry code of practice, the Alternative Investment Management Association (AIMA) this week published its revised Guide to Sound Practices for European Hedge Fund Managers.

The Guide - originally published in 2002 - considers various practical aspects of establishing and managing a hedge fund business in Europe and recommends corresponding sound practices. It is intended to be a practical business tool for hedge fund managers, and to provide relevant and insightful information for the investor and regulatory community, and to all those servicing and providing professional advice to the hedge fund industry.

The revised Guide was developed and overseen by a 30-strong industry working party, with a central role played by Goldman Sachs Prime Brokerage who both originated and dedicated significant resources to the project. The working party comprised leading European Hedge Fund and Funds of Hedge Fund Managers, prime brokers, fund administrators, legal and auditing professionals. The Guide reflects the practical issues which any well-run business in the hedge fund sector should strongly consider.

The Guide covers the following key issues:

• Creating and Managing a Hedge Fund Business
• Investment Process and Portfolio Risk Management
• Portfolio Administration and Operational Controls
• Raising Capital and Investor Relations
• Hedge Fund Structures and Organisation

Florence Lombard, Executive Director of AIMA commented: “Since AIMA’s inaugural Sound Practices Guide was published five years ago, the European hedge fund industry has grown dramatically from US$64 billion to over $450 billion today. The industry has also evolved in terms of investment techniques, strategies, financial instruments used and, indeed, the way in which the industry is regulated.”

“This updated Guide reflects these significant developments and seeks to provide guidance on the additional matters which a hedge fund manager should take into account now.”

Since the ‘Guide to Sound Practices for European Hedge Fund Managers’ was first published in 2002, it has been downloaded from the AIMA website over 90,000 times. The new version of the Guide can be downloaded from the AIMA website at www.aima.org/uploads/GuidetoSoundPracticesforEuropeanHFMMay2007.pdf.

AIMA, the Alternative Investment Management Association, has over 1,100 corporate members worldwide, based in 47 countries. Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting services and fund administrators.

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