AIMA Releases Risk Disclosure Guidelines For Australian Hedge Funds

by Carla Johnson, Investors Offshore.com

31 August 2007

AIMA Australia, the Australian chapter of the Alternative Investment Management Association, has released its Risk Disclosure Guidelines for Australian hedge funds.

In a statement issued earlier this month, AIMA explained that the move "strongly underlines" the industry’s commitment to best practice for providing information to investors about investing in hedge funds.

The Guidelines have been developed by members of the AIMA Australia Regulatory Committee over the past year, and they are designed to create a clear communication format to enable potential investors to easily compare and assess the hedge fund offerings available to them.

“The Guidelines aim to improve the exchange of information between Australian hedge fund managers and the investor, and provide even greater assurance of the industry’s transparency and professionalism,” AIMA Australia Chairman, Kim Ivey explained.

“While they are voluntary, AIMA Australia strongly encourages members to take the Guidelines into account in their documentation, such as the Information Memorandum or Product Disclosure Statement. With around 80% of Australian hedge funds managers being AIMA members, and following feedback obtained to date, we expect them to be widely adopted," she added.

The Guidelines aim to provide individual investors with more detail of key terms in the offer documents, and encourage them to look beyond past performance when evaluating a hedge fund. These key terms include: how managers use leverage; liquidity of the underlying assets and the Fund; the specific risk of particular investment strategies; and increased standardisation regarding how fees and costs are explained.

According to AIMA, the Australian hedge fund industry has evolved rapidly over the past few years, bringing its current level of assets under management to over A$63 billion (US$51.7 billion), one of the largest in the Asian region. There has also been a significant increase in the number of different hedge fund strategies available to Australian investors.

Founded in 1990, AIMA is the not-for-profit trade association dedicated to representing the world’s alternative investment community.

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