Foundations join new HFSB investor chapter

Foundations and endowments and stewards of their hedge fund investments are among 30 founding members of the Hedge Fund Standards Board’s investor chapter, announced today.

Funds of funds such as Permal, Liongate Capital Management and PAAMCO, which each allocate money to hedge funds on behalf of foundations, are among the cornerstone members. Portugal’s Champalimaud Foundation, which supports biomedical research, also signed up.

The 30 allocate an aggregate $180bn to hedge funds, just over 10% of the industry’s $1.63trn assets.

The new chapter complements the HFSB’s group of single hedge fund members.

Other institutional investor members announced today include Axa Investment Managers, Fauchier Partners, FRM, Pictet Alternative Investments, Unigestion and Union Bancaire Privée Asset Management.

Antonio Borges, HFSB chairman, said institutional investors are simultaneously the primary beneficiaries of higher standards among hedge funds, and best placed to persuade them to adhere.

The HFSB was established as a voluntary global standard setting body in January 2008, to promulgate and promote good practices for hedge funds and investors in them. It has lobbied watchdogs and politicians on hedge fund regulation such as the contentious EU Alternative Investment Fund Managers directive, and set out guidelines on areas such as portfolio valuation, corporate governance, fees and reporting.

Various practices in all these areas by hedge funds caused consternation and anger among investors during the credit crunch. Managers who are signatories to HFSB standards are committed to applying them.

Randall Dillard, Liongate’s co-founder, said: “In the last few years, we have witnessed strong improvements in the corporate governance framework of the hedge fund industry, and it is our firm belief that this should represent a foundation for the continued and co-ordinated global structure of best practice and controls within the hedge fund industry.”

Separately, Mario Therrien, senior vice president for fund management at Caisse de dépôt et placement du Québec has been appointed to the board of trustees of the HFSB.

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