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Hedge Fund Standards Board (HFSB) becomes Standards Board for Alternative Investments

Wednesday, September 13, 2017
Opalesque Industry Update - The Hedge Fund Standards Board (HFSB), the global standard-setting body for the alternative investment industry, has changed its name to the Standards Board for Alternative Investments (SBAI). The new name reflects the evolution of the industry and the ongoing development of the SBAI as it enters its second decade.

The SBAI originated in June 2007 when a group of leading alternative investment managers formed the Hedge Fund Working Group to develop industry standards in areas such as disclosure, valuation, risk management, governance and shareholder conduct. In January 2008, the Hedge Fund Standards Board was established as a non-profit organisation to oversee and further develop the Standards. Today, the SBAI is supported by approximately 200 alternative investment managers and institutional investors with $3 trillion in aggregate capital, and is governed by a board of major investors and managers.

The change in name reflects the evolution of the alternative investment industry, in which managers increasingly offer their investment strategies through a variety of vehicles beyond "hedge funds" - including liquid alternatives, regulated funds, co-investment vehicles, drawdown funds and managed accounts. At the same time, investors have moved away from the "hedge fund" term as they classify and integrate a diverse array of alternatives strategies by underlying asset class, return profile, market exposure or liquidity. Further, many of the SBAI's standards and guidelines, while developed for alternatives managers, have broader applicability across asset management.

Dame Amelia Fawcett, Chairman of the SBAI said: "Over the last decade, the SBAI has developed and implemented a model that is unique in the investment industry. This is a neutral platform bringing together investors and managers as equal partners in solving issues and developing standards of practice. As we enter the SBAI's second decade, the platform is as relevant as ever, given the industry's complex array of investment strategies and vehicles and the importance of meeting investor requirements in a highly competitive environment. We are pleased to see continued growth in industry support, particularly over the last couple of years, from both the institutional investor and manager communities globally."

Dale West, Senior Managing Director, Teacher Retirement System of Texas and Trustee of the SBAI said: "From an investor perspective, the Standards contain core principles that apply to all types of investment management activities, not just those organized as hedge funds. The name change positions the SBAI to engage more broadly with investors, regulators and the industry to address emerging issues."

Luke Ellis, CEO of Man Group and Trustee of the SBAI said: "The alternatives industry has evolved significantly as managers have developed solutions to suit a variety of investor needs and created strategies designed to deliver many types of returns. The new name reflects the SBAI keeping pace with this evolution, with standards and guidelines that managers can apply across their businesses, demonstrating their commitment to sound practices."

The practices and solutions developed by the SBAI are documented in the Alternative Investment Standards (the Standards), which managers commit to by becoming SBAI signatories. Additionally, the SBAI publishes industry guidelines and resources under its "Toolbox", complementing its standard-setting activities. Also the SBAI has established working groups to study Total Expense Ratios and Factor-Based Investment. The SBAI expects to publish results of those working groups later in 2017.

Managers joining the SBAI over the last 12 months include: 400 Capital Management, BlueBay Asset Management, China Alpha Fund Management, Citadel, Frontlight Capital, Graticule Asset Management Asia, Hiscox Re Insurance Linked Strategies, Ivaldi Capital, Jasper Capital International, LIM Advisors, Misaki Capital, Myriad Asset Management, Nezu Asia Capital Management, Nordkinn Asset Management, Simplex Asset Management and Trustbridge Partners.

Investors joining the SBAI over the last 12 months include: Air Canada Pension Investments, Alaska Permanent Fund Corporation, CB Permatrust Asset Management, Japan Post Bank, Morgan Stanley Investment Management, New Jersey Division of Investment and Pennsylvania Public School Employees' Retirement System.

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