The standard of governance within the hedge fund industry needs significant improvements and is currently exposing investors to high risks, says Dr Daniel Summerfield, co-head of responsible investment at the £32bn Universities Superannuation Scheme (USS).
“One critical factor, which is often overlooked, is the role, responsibilities and quality of independent directors,” he adds.
USS has contributed the opening chapter to a guide to investor preferences published today by the Investor Steering Committee of the Alternative Investment Management Association (AIMA), the global hedge fund association.
The chapter, written by Luke Dixon, portfolio manager of absolute return strategies at USS, focuses on hedge fund governance.
The publication, A Guide To Institutional Investors’ Views And Preferences Regarding Hedge Fund Operational Infrastructures, is comprised of contributions from members of AIMA’s Steering and Research committees, and includes viewpoints from the California Public Employees Retirement Scheme (CalPERS) and British Airways Pension Investment Management. Its aim is to look into the operational and organisational issues which are increasingly the focus of due diligence reviews.
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