Alpha Finance Advisors » Risk Reporting

K1 fund and related funds… the importance of due diligence

admin — Mon, 11 Feb 2013 11:02:19 +0000

we have found the article linked below on yet another ponzi scheme, this time from Germany. The point being: due diligence matters! as always we will be happy to help of course.

http://www.being-diligent.com/case-n-10-k1/

Weavering… Liquidator sues the Administrator

admin — Thu, 10 Jan 2013 09:55:53 +0000

As reported today in the Irish Independent, the liquidator has decided to go after the administrator. This is just reiterating the importance of proper monitoring from all parties involved with asset managers. There should be processes and systems in place to monitor limits. guidelines and major types of risks.. like counterparty in this case, which would have highlighted the situation.

#mce_temp_url#

Weavering judgment: an alarm bell for NEDs

admin — Wed, 29 Aug 2012 16:02:51 +0000

Last year judgement in the Cayman courts should still be resounding loud and clear in the mind of NEDs of hedge funds of course, but also of any Asset Management company. the AIFMD will likely hammer that point in further. These conclusions are at the heart of our creed and insist on risk governance and infrastructure. We have summarized some important points in the attached document and we hold a full copy available to those of you who might want to read it “in the text”.

Weavering judgment_ a warning for NEDs

Changes to Leverage Calculation for Collective Investment Schemes

admin — Mon, 20 Aug 2012 15:55:58 +0000

the CSSF August newsletter clarifies what is expected from Collective Investment Schemes registered in Luxembourg for the calculation of leverage. it is now compulsory for all such funds to use the notional based approach for all derivatives. It is of … Continue reading →

Tips for Hedge Funds manager from the Geneva Family Office conference

admin — Sat, 09 Jun 2012 09:59:50 +0000

I attended this past week the Geneva Family Office Conference where I spoke on “why should hedge funds be part of a Family Office asset allocation”.

Interestingly some Family Offices volunteered a few tips on what they were expecting/looking for in hedge funds. The two factors that they put out first were TRUST and TRANSPARENCY, they biggest fear being STYLE DRIFT. This obviously can have a few very different meanings so they elaborated further in a few practical points:

- Produce a written DDQ

- Communicate via clear reports

- Produce and distribute a Risk Dashboard

- Make your decision/investment process clear and explain how it lead to the current state of the portoflio

- Demonstrate alignment of interest

- Be/participate in databases

- Be open to/facilitate peer analysis

These are not going to be everybody’s cup of tea but feed back is a gift, especially when it comes from potential investors.

Alpha Finance Advisors will be very happy to help you put all this in place. Feel free to contact us.

Happy New Year

admin — Sun, 15 Jan 2012 10:00:19 +0000

New Year 2012

Extracts on the need to establish proper Risk Management Governance and keeping it up to date

admin — Thu, 22 Dec 2011 12:47:22 +0000

We continue the publication of extracts of the ESMA AIFMD level 2 document released late November.

We are happy to discuss further the implications of that document. feel free to contact us!

AIFMD level 2 on the need to establish proper Risk Management Governance and keeping it up to date

AIFMD Level 2 – permanent risk management function

admin — Fri, 02 Dec 2011 10:42:32 +0000

ESMA has released their comments on the AIFMD and we continue to release extracts that we find important and relevant to our area of focus: risk.

as you will see, the AIFMD gives an important place to an independent permanent risk management function, with direct reporting line to the governing/supervisory body of the AIF; the attach documents goes into high level principles on the roles and responsibilities of this function.

Needless to say we would be delighted to assist you in putting in place a suitable organisation!

AIFMD level 2 – extracts on the necessity and importance of a permanent risk mangement function

AIFMD – level 2- some high level principles

admin — Tue, 22 Nov 2011 20:31:30 +0000

As some of you might probably be aware Level 2 for AIFMD has been released. We intend to publish extract we believe are the more relevant to our business and to the themes we have been promoting since we were created: risk governance, risk reporting to investors, congruence between prospects, marketing documents ad transparency/risk reports… and the value of a robust risk monitoring process. So bear with us, in the coming weeks we will cut and comment and hopefully make it easier for you to digest the bigger part of those 500 pages… AIFMD level 2 – some high level principals

Our friends at OWL comment on Suitability

admin — Sun, 26 Jun 2011 12:54:10 +0000

The Suitability Standard

If you have not received the FSA’s Dear CEO letter on its wealth management review, you are either lucky or have an incompetent postman. Those who are not so fortunate would be unwise to ignore the obvious warning implicit in it. Courteous it may be; subtle it is not. FSA is raising its standard; it wants these colours to be visible from coast to coast. And it definitely expects firms to raise their standards too.

However skewed their sample may have been, with findings of 79% failure, the FSA cannot now let up on this suitability campaign. It will soon be showing on a street near you. Note also that it is Margaret Cole who has signed the letter. Read into that what you will.

It would be churlish to ignore the FSA’s invitation to assess the suitability of your client files. Acts of brave defiance are best reserved for another day. And be sure to be ready to explain how you have applied Principle 6 to your findings.

The challenge is to be able to demonstrate compliance; that is going to be the hardest part for many. Note the comment ‘a high risk of unsuitability or the suitability could not be determined’. It is a fair bet that the latter group is by far the larger. And it is worth recognising the added dimension: if investments go belly-up and you cannot demonstrate their suitability, a tricky client may choose to sue.

Although the findings include inconsistencies with client objectives, it is clear that the greater problem is failure to take proper account of clients’ attitude to risk. Inadequate risk management systems get an honourable mention too.

Note also their concern about non-conformity to the ‘house model’. As with all procedures, the easiest charge is failure to stick to the letter of your own law. If the house model is not mandatory, be sure to be clear about that.

Remember that compliance with the letter of the rule is the barest minimum; questioning will quickly revert to a principles basis, focusing largely on skill, care and diligence. But you will also have recognised the letter’s unattributed quote from Principle 3.

The quality of firms’ responses will help FSA to prioritise their further reviews. This is not a time to be glib, unless, of course, you find your supervisor irresistibly attractive.

The FSA invites responses by 9th August.

What needs to be done? What needs to be done by 9th August? What should the letter say? How big is this exercise?

OWL advises and supports the investment industry.

Oliver Lodge