Bailey McCann, Opalesque New York:
Valuations are a tense subject for fund managers. Not only are they often complex and difficult to verify, investors are calling for more transparency in the process and third party verifications adding more to the process. I spoke with David Larsen, Managing Director and Leader of New York-Based Duff & Phelps, Alternative Asset Advisory Practice about what managers will face with valuations in 2012.
"Investors and managers in alternative assets both need to realize that they need to do more for valuations to attract solid capital," Larsen explains. Alternative assets are often complex, but as regulators and investors alike start to demand more from managers on valuations, everyone will be required to increase their knowledge of the process.
According to Larsen, if managers want to provide sound valuations, they need to take full responsibility for valuations and the procedures that they use to come to those valuations. These activities should then be supported by an independent, third party valuation expert, separate from a fund administrator that has expertise with the prices and assets being looked at. Larsen explains that this best practice has emerged as all parties have realized that they need to be more involved in what is being presented as fair value. "I see more recognition from investors of their responsibility. Everyone has responsibility in the chain."
This is especially true for investors such as pension funds ......................
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