Hedge fund side letters: guidance for UK managers

Abstract

Purpose

This paper seeks to discuss the Guidance Note on disclosure of hedge fund side letters issued by the UK's Alternative Investment Management Association (AIMA) in September 2006.

Design/methodology/approach

Explains the meaning of “material” and “non‐material” and recommends immediate actions and ongoing disclosure policies for funds and fund managers.

Findings

Generally, it is more appropriate for disclosure to come from the fund than the fund manager. The manager has a degree of discretion as to what constitutes a “material” term. The new FSA approach does not prohibit the use of side letters.

Originality/value

An interpretation of the Guidance that will help fund managers fine‐tune their policies on use of side letters and disclosure of terms in those letters.

Citation

Astleford, P.D., Frase, R., Hougie, A. and Martin, S. (2007), "Hedge fund side letters: guidance for UK managers", Journal of Investment Compliance, Vol. 8 No. 1, pp. 13-15. https://doi.org/10.1108/15285810710739319