Administration and operations

Fri Jun 5, 2009




The sound practices for the administration and operations of a fund of funds are as important as those for the investment teams. Internally, there should be an appropriate segregation of duties between investment teams and the risk management/operational staff and procedures should be set up to ensure that service providers are acting in the best interests of the fund of funds.

The use of an independent administrator offers both investors and the fund of funds many benefits. Other duties that need to be considered include: trade processing and settlement, cash management and control, pricing of portfolios, net asset valuations, maintenance of appropriate information systems and service provider oversight.

Trade processing can be complex and a fund of hedge funds should ensure that the administrator has adequate internal controls to properly identify and record detailed information on all transactions between investors and the FoHF. Procedures for dealing with the notification...

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