When AIMA and the fund of funds executives began work on the guide one year ago, few could foresee the liquidity crisis that would come to dominate the latter months of 2008 and the beginning of 2009. Then, just as the worst seemed to have passed, the Madoff fraud rocked a good number of funds of hedge funds. With the benefit of hindsight, it’s clear that the decision to prepare the guide was an inspired one and showed real commitment to pushing the industry forward.
“We wanted to make sure the guide was thorough and could apply in multiple jurisdictions,” says Andrew Baker, AIMA’s CEO in an interview. “That was a big part of the challenge. Investor preferences, practices and regulators are all substantially different.”
At the same time, the Steering Group sought to avoid being overly prescriptive. Its members were well aware that a ‘one size fits all’ approach wouldn’t be appropriate for an industry that is practically defined by its resistance to easy classifications.
The guide marks a new chapter in AIMA’s publishing programme. It builds on a 2005 sound practices guide for European hedge fund mangers which has since been revised. But the approach and the principles underpinning the new guide are rather different.
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