AIMA to unveil funds-of-hedge-funds standards

The Alternative Investment Management Association of London is preparing the first-ever practice standards for funds of hedge funds. “There are currently no dedicated guidelines for fund-of-hedge-fund managers, yet the majority of new institutional investors tend to favor this investment route rather than investing directly in hedge funds,” said Andrew Baker, AIMA deputy chief executive and a member of the steering group responsible for developing the guidelines. The standards are expected to be completed early next year. In addition to providing direction on sound practices for fund-of-funds managers, the guidelines will also seek to provide relevant information for investors, regulatory and political communities, and hedge fund industry service providers. “With established sound practices in place for hedge fund managers and on various hedge-fund-related topics, there is a desire to document managers’ activities and responsibilities,” Mr. Baker said. “The guidelines will demonstrate both the amount of work achieved in this area as well as the industry’s continued focus on documenting and enhancing its practices.” According to Hedge Fund Research Inc. in Chicago, the number of funds of hedge funds grew to 2,600 at the end of March, up from 2,220 at the end of 2006.