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Hedge fund governance a crucial issue, says pension fund USS in new AIMA guide

Tuesday, May 31, 2011

Luke Dixon
Opalesque Industry Update - Pension fund contributes opening chapter in new guide from AIMA’s Investor Steering Committee

The £32bn Universities Superannuation Scheme 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. Luke argues that this has become a crucial area in the investment decision-making process. He goes on to outline the expectations of institutional investors with reference to the fundamental importance of good governance, key constitutional documents and the role of boards of directors.

Commenting on the new guide, Mike Powell, Head of Alternatives at USS, said: “Good governance is a core principle of USS's hedge fund programme. This publication represents a practical guide to how hedge fund managers can implement good governance whilst simultaneously providing investors with an invaluable benchmarking tool to assist in their due diligence. I fully endorse it.”

Dr Daniel Summerfield, Co-Head of Responsible Investment at USS, said: “The standard of governance within the hedge fund industry needs significant improvements and is currently exposing investors to high risks. One critical factor, which is often overlooked, is the role, responsibilities and quality of independent directors. As an active and responsible steward of all asset classes in which we invest, USS endorses this guide which should provide investors with invaluable advice on this important aspect of a hedge fund due diligence process.”

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.

(press release)

About the Universities Superannuation Scheme
USS is the second largest private sector pension scheme in UK and the principal pension scheme for UK Universities and Higher Education institutions. It has in excess of £32 billion of assets as of March 31st 2011 and approximately 285,000 members across 395 institutions.

About AIMA
As the global hedge fund association, the Alternative Investment Management Association (AIMA) has over 1,200 corporate members (with over 5,000 individual contacts) worldwide, based in over 40 countries. www.aima.org.

AIMA’s Steering Committee

Committee Members 2011
Mark Anson - (Oak Hill Investment Management LP)
Eric Breval - (Fonds de Compensation AVS)
Luke Dixon* - (Universities Superannuation Scheme)
Christopher Fawcett - (Fauchier Partners)
Cathy Iberg - (UTIMCO)
Gumersindo Oliveros - (Kaust Investment Management Company)
Robert De Rito - (APG Asset Management)
Kurt Silberstein* - (CalPERS)
Michelle McGregor Smith* - (BA Pension Investment Management Ltd)
Vera Kupper Staub - (Pensionskasse Stadt Zurich)
John Stevens - (General Motors Asset Management)
Jacob Tsang - (Hong Kong Jockey Club)
Tom Kehoe - (AIMA)
Andrew Baker - (CEO, AIMA)
Todd Groome - (Chairman, AIMA Ltd)

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