The development of Managed Funds Association's 2005 Sound Practices for Hedge Fund Managers

Abstract

Purpose

To summarize Managed Funds Association's (MFA's) 2005 Sound Practices for Hedge Fund Managers™, which is designed to enhance the ability of hedge fund managers to manage operations, comply with applicable regulations, address unexpected market events, and help hedge funds satisfy responsibilities to investors.

Design/methodology/approach

Highlights the development of, and some of the recommendations set forth in, MFA's 2005 Sound Practices under the following categories: management and internal trading controls, responsibilities to investors, valuation policies and procedures, risk monitoring, regulatory controls, transactional practices, and business continuity and disaster recovery.

Findings

MFA's 2005 Sound Practices builds on recommendations first published in 2000, and subsequently revised by MFA in 2003, offering sound guidance on business and operational practices. In the 2005 update, MFA has expanded on topics of importance, including internal trading controls, responsibilities to investors, valuation, and risk controls, and has addressed new issues such as compliance programs, codes of ethics, and certain transactional practices. The 2005 Sound Practices is written from a “peer to peer” perspective and focuses on practices that are relevant primarily to the single‐manager hedge fund operation.

Originality/value

Article summarizes an essential hands‐on manual for hedge fund managers.

Citation

Miranda Pries, S. (2005), "The development of Managed Funds Association's 2005 Sound Practices for Hedge Fund Managers", Journal of Investment Compliance, Vol. 6 No. 1, pp. 63-70. https://doi.org/10.1108/15285810510634713