The 2008 financial crisis brought about an avalanche of financial regulation that has not passed over the hedge fund sector. As a result, products and valuation practices have become more complex. To assist the hedge fund community, the Alternative Investment Management Association  (AIMA), the global hedge fund industry association, has updated its Guide to Sound Practices for Hedge Fund Valuation , which seeks to reflect the changes in the markets and industry with respect to valuation since 2007.

Aimed at supporting the hedge fund community (i.e. managers, investors and professional services firms), this updated Guide takes account of recent regulatory reforms, including AIFMD, and changes in accounting standards.

This guide includes 16 recommendations that reflect the industry sound practices within the areas of governance; transparency; procedures, processes and systems; and sources, models, and methodology.

Jennifer Wood, Director, Head of Asset Management Regulation at AIMA, who presented the third edition of this guide on Tuesday 28 January 2014 at a conference sponsored by PwC Luxembourg, said : “AIMA’s 2013 sound practices Valuation Committee has revised the Guide’s Recommendations and commentary in the light of recent developments. Changes in accounting standards, greater demands from investors and new reforms have changed the way the hedge funds community approach valuation. The Guide also makes a distinction between where valuation practices are mandatory and where discretion applies.”

Luc de Vet, Managing Director at Citco Fund Services S.A., added: “Now that the Hedge Fund industry has emerged from the financial crisis and with new regulations, valuation has become more than ever a critical topic.”

Fanny Sergent, partner at PwC Luxembourg, concluded: “Restoring trust and creating positive relationships with investors and regulators are what we aim for. And AIMA’s updated guide to Sound Practices for Hedge Fund Valuation provides support to the community who has to deal with many challenges.”