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Home > Resources > Industry News > Regulatory Updates > Proposed Best Practices for Hedge Funds Released

Proposed Best Practices for Hedge Funds Released

Two private-sector committees established by the President's Working Group (PWG) have released separate yet complementary sets of best practices for hedge fund investors and asset managers. The PWG tasked the committees, comprised of well-respected asset managers and investors, with collaborating on industry issues and developing a set of best practices for their respective groups of stakeholders. The PWG includes the heads of the U.S. Treasury Department, the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission. The best practices for the asset managers call on hedge funds to adopt comprehensive best practices in all aspects of their business, including the critical areas of disclosure, valuation of assets, risk management, business operations, compliance and conflicts of interest. The best practices outlined in a summary and detailed in the full report. The best practices for investors include a Fiduciary's Guide and an Investor's Guide. The Fiduciary's Guide provides recommendations to individuals charged with evaluating the appropriateness of hedge funds as a component of an investment portfolio. The Investor's Guide provides recommendations to those charged with executing and administering a hedge fund program once a hedge fund has been added to the investment portfolio. Russell Read, Chief Investment Officer of the California Public Employees' Retirement System, leads the Investors' Committee. These best practices are also outlined in a summary and detailed in the full report. The recommendations will be open for public comment for 60 days. The committees then will review and, as necessary, revise these best practices and standards. Comments may be submitted at the Committees' website. The committees will continue to meet to discuss raising the standards for industry participants after the best practices are complete.

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