Friday, 19 November 2010

Wanted! - Hedge Fund Directors with Ops Experience

There was a time when all Directors of Hedge Funds had to do to get their $5k each year was dial into an annual conference call and rubber stamp the NAV of the Fund and any material changes to it's Service Providers.

No longer.

Now all of a sudden Directors need to a have a detailed understanding of the Hedge Fund, its underlying investments and crucially how these assets are valued. In other words for the first time Directors need to understand Hedge Fund's Operations.

This most definitely hasn't always been the case. Many Directors served on numerous funds boards and it was widely regarded few of them understood how to value CDO's, CFD's, Credit Default Swaps etc correctly. Either as instruments or what they should be looking out for.

However since the financial earthquake of 2008 that has all changed. Directors must now understand how to fairly price the fund's investments, maintain a detailed record of the fund liquidity and investors situation and closely monitor any unusual breaks in cash or asset reconciliation. Directors for the first time must be proactive in understanding and investigating the operational areas of their Hedge Funds.

What this means for Hedge Funds is that (quite understandably) Directors Fees are on the way up. I have heard comments of moves to Fee's approaching $30k - especially as more detailed governance and scrutiny precludes serving on a large number of Fund's Boards. Additionally, what this means in the industry is for the first time Directors with a history in the operational end of the Alternative Investment business are in high demand.

And the word on the street is that there are not many of them out there.

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