By incorporating the latest in industry best practices for valuation, the Carne Global âBest Practiceâ Product enables fund managers to better manage the increasing risk and complexity of the valuation process, particularly with complex and illiquid instruments.
The Valuation âBest Practiceâ Product incorporates the recommendations of the UKâs Hedge Fund Working Group/Hedge Funds Standards Board (HFSB) and the US Presidentâs Working Group; The European Funds and Asset Management Association (EFAMA); the International Organization of Securities Commissions (IOSCO); and accounting standard FAS 157. Once the product and any subsequent recommendations have been implemented, managers will be able to claim compliance with the HFWG recommendations on valuation.
The valuation product is a strong, tested and proven process with a well-defined methodology that reviews all relevant fund documents. Its structured approach to pricing and valuation enables clear governance structures, giving investors greater comfort and helping to ensure that all parties to the fund have total clarity as to fund pricing. As a tool for improving transparency in fund governance, the Valuation âBest Practiceâ Product offers a range of deliverables encompassing valuation policy, terms of reference for valuation committees and marketing summaries.
Carne Globalâs product facilitates:
â¢ clear identification of pricing roles, responsibilities and segregation
â¢ identification of pricing sources
â¢ identification of levels of price validation and tolerances
â¢ identification of pricing weaknesses and associated mitigations
â¢ definition of controls and reporting
â¢ reporting to asset manager valuation committees and boards
The product focuses on either a specific fund or the managerâs entire fund range and analyses the holdings and the key risks involved, with an emphasis on complex and illiquid instruments. It clearly documents how the administrator and manager each price the portfolio, as well as how and where counterparty, prime broker and third party prices are utilised, while being able to address issues around side pockets.
Sunil Chadda, Head of Alternative Investments at Carne Global, commented:
âThe high levels of innovation in the hedge fund industry, and the continuing search for alpha across different asset and instrument classes, mean that the challenge of valuation is only going to increase. Carneâs Hedge & Traditional Fund Valuation âBest Practiceâ product goes a long way to simplifying the process and improving controls and transparency - issues of critical importance to investors and the continuing development of the industry.â