Summary of UK Hedge Fund Working Groupâ??s recommendations
- An appropriate level of disclosure of investment strategy and its risks
- Explain how assets have been invested
- Disclose fees and withdrawal terms
- Disclose material side agreements with investors
- Use an independent group for fund valuation, or for assets valued, and internally set Chinese walls from the portfolio manager. Disclose internal valuation
- Regularly disclose percentage of fund in hard-to-value assets
- Set up internal risk framework, including reporting lines, and explain it to investors
- Stress-test the fundâ??s liquidity and impact of extreme market events
- Appoint compliance officer independent of portfolio managers, unless too small to do so
- Set up policies to prevent market abuse
- Consider appointing more than one prime broker and appoint reputable auditors
- Disclose potential conflicts of interest from service provider agreements
- Encourage hedge fund board to meet at least quarterly
- Do not vote borrowed shares
