AIMA launches survey for common hedge fund NAV policy

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The UK-based Alternative Investment Management Association (AIMA) is asking hedge funds to take part in a survey to identify a common approach to valuing hedge fund assets and pricing hedge fund net asset values (NAV).

AIMA is asking institutional investors, fund of funds managers, hedge fund managers, CTAs, prime brokers and fund administrators to complete a questionnaire by the end of March. The findings will be reported by EDHEC Risk, an asset management research organisation based in Lille and Nice.

AIMA says it will use the study to attempt to assess the fair value, performance and risks associated with investing in hedge fund strategies. In particular, it wants to identify common valuation practices throughout the industry These will be incorporated in new guidelines on asset pricing and hedge fund NAV calculation.

NAVs are the fair value of a hedge fund’s assets minus the fair value of its liabilities. The NAV is used to establish investor subscriptions and redemptions. Under generally accepted accounting rules, the NAV should include accrued interest, dividends and other receivables of the hedge fund, as well as accrued expenses.

Managers normally report NAVs to investors once a month. However, investors have complained that the different pricing approaches used by hedge funds create significant valuation differences, and that there is a lack of consistency in how assets are valued in hedge fund portfolios. This creates problems for investors who want to compare hedge fund performances.

The questionnaire is at

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