During the last ten years, a number of several elements have come together to make Latin America a very exciting location for managers of and investors in hedge funds. These elements include a substantial and increasing population of wealthy and institutional investors, continuously improving managers and a flood of international investors looking for geographic diversification.
As the size of the market has grown, so too has its level of sophistication. Just as U.S., Asian and European investors have come to demand greater levels of operational and investment excellence, Latin American investors also now expect to receive the same standards. This includes institutional quality risk management, compliance, execution and a clear, repeatable and consistent in- vestment methodology, among other things.
Merlin Securities, which earlier this year established its Latin American presence and tapped Victor Hugo Rodriguez as its newest partner and head of Latin American sales, offers a paper to help both investors and managers achieve institutional quality.
█ The Big 12: Merlin’s Best Practices For Hedge Funds
Managers who meet these Big 12 Best Practices and generate Alpha can seize the growth opportunities in the marketplace.
- Written compliance and employee trading policies with periodic attestation
- Multiple levels of authority on cash movements with a minimum of two people controlling input, release and approvals
- Written and consistent valuation policy by asset class
- Sound technology and infrastructure with reliable back-up, disaster recovery and business continuity plan
- Open architecture to handle multiple prime brokers, multiple custodians and managed accounts
- An understanding of why these firms are used and the alpha they generate
- Clear risk management methodology
- Ability to prove best execution
- High-quality audit, tax and legal representation
- Sustainable third party administration with SAS 70 Type II
- Dedicated operations manager, COO, CFO and CCO
- Significant principal’s money in the fund
To view the full report, please visit the sourced website.