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SEC Looking at How Alternative Funds Value Investments 

February 6, 2014
Daisy Maxey, The Wall Street Journal

Regulators are taking a close look at how hedge funds and other alternative investment funds value their most illiquid assets. It's time more investors did the same.

A fund's valuation method can have a big impact on investors' returns: It can affect whether an initial investment is made, how much a manager is paid, and the sale value of a fund's assets. Yet many investors don't understand how uncertain and subjective pricing can be for holdings such as complex derivatives or bonds and stocks that lack active secondary markets.

The increased focus on valuation issues by regulators is largely the result of the Dodd-Frank financial overhaul. Signed into law in 2010, Dodd-Frank made hedge-fund managers subject to the same registration and regulatory oversight as other investment advisers regulated by the Securities and Exchange Commission. At the start of this year, there were 4,136 investment advisers to private funds registered with the SEC, 2,586 of which were advising hedge funds.

Read more: The Wall Street Journal

 

 
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