In May 2011, the Alternative Investment Management Association (AIMA) released a paper: A Guide to Institutional Investors' Views and Preferences Regarding Hedge Fund Operational Infrastructures. There are five sections, each authored by an investor, and AIMA compiled their ideas. The topics are Governance, Risk, Investments, Capital and Operations. Below are some topics of interest that I found striking:
Good governance should handle any conflicts of interest between the fund manager, board of directors and the investors. Investors should be allowed to buy shares and have voting rights similar to a publicly traded corporation. The board would have increased duties: managing service providers (including the fund manager) and valuation. The board should be composed of three to five directors with a majority of them being independent. The directors should meet quarterly.
Risk reports should be sent on a monthly basis. The other sections: portfolio, operational, counterparty and liquidity held no surprises.
In the investments section, investors should be able to redeem their investments within a year.
Capital and operations sections held no new concepts.
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