Progress report
An assessment of hedge fund YTD performance in the face of renewed fears for a potential eurozone crash Read More
Against the backdrop of difficult market conditions and growing investor…
10/08/2011
With global markets faltering, managers have been skimming 2008 diaries, as they familiarise themselves with the lessons of that watershed year. Most have done a pretty good job of already absorbing the facts – funds are already more transparent, better run and have strived hard to replace more flighty investors with ‘sticky’ institutional cash.
However, as firms have diversified investor bases, the compliance burden has also grown, often in proportion with the perceived longevity of the investor type. Managers currently courting private
pension funds should be particularly aware of Employee Retirement Income Security Act (Erisa) rules, triggered when the assets of US benefit plans become 25% of a fund’s total AuM.
In the past this just wasn’t a problem. Funds may have been indirect managers of Erisa cash via fund of hedge funds allocations, but certainly didn’t fall under regulation that demanded
SEC registration and a careful consideration of performance fees, side letters and reporting.
Now, with more direct investment the industry has reached tipping point where a significant number of managers – mostly, but not exclusively, US-based – must now undertake the fiduciary
responsibilities of Erisa participants.
Pre-2008, this prospect would have terrified many. In 2011 abiding by Erisa should hold no fear, with some managers even seeking the status of Erisa custodians before the 25% is breeched.
What once unnerved managers has become the norm: Dodd-Frank has made SEC registration unavoidable, side letters are already a blunted tool and Erisa has become an attainable set of standards that should be treated as an opportunity, rather than an administrative headache.
07/06/2012
Join us and our panel of experts for HFMWeek's Subscribers' Club June's UK breakfast briefing, 'Impact…
31/05/2012
The next US HFMWeek Subscribers' Club breakfast, will take place on Thursday May 31. Join us and…
02/02/2011
HFMWeek's European Hedge Fund Services Awards are designed to recognise companies that have outperformed...
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