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CalPERS 'strongly endorses' AIMA hedge fund relationship guide

Tuesday, May 31, 2011

Joseph Dear
Opalesque Industry Update - The California Public Employees’ Retirement System (CalPERS) has strongly endorsed a new guide by the Investor Steering Committee of the Alternative Investment Management Association (AIMA), the global hedge fund association, to promote better alignment of interests between institutional investors and hedge fund managers.

“Public pension funds and other institutional investors account for most of the capital within the hedge fund industry,” said Joseph Dear, CalPERS Chief Investment Officer. “This guide by AIMA’s Investor Steering Committee contains recommendations that will enhance our partnerships with fund managers. It’s a good benchmark for this maturing industry.”

The Investor Steering Committee paper, A Guide To Institutional Investors’ Views and Preferences Regarding Hedge Fund Operational Infrastructures recommends, for example, that:

Hedge funds’ investment objectives and strategies should describe the assets to be invested, geographic sectors where the assets may be limited and management trading style;

Hedge funds have predominantly independent boards of directors who are materially free of conflicts with the investment manager;

Hedge fund risk reporting should give investors the necessary tools to understand how much risk managers are utilizing within their portfolios;

Investors should be able to track the performance of hedge funds based on quantitative and qualitative reports that are updated at least monthly; and

Hedge fund managers should give investors the information they need to analyze a fund’s goals, strategy capacities and resources to achieve those goals.

CalPERS is the nation’s largest public pension fund with approximately $236 billion in market assets. It provides retirement benefits to more than 1.6 million State, public school, and local public agency employees, retirees, and their families, and health benefits to over 1.3 million members. The average CalPERS pension is $2,220 per month. For more information about CalPERS, visit www.calpers.ca.gov.

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