The Hedge Fund Book: A Training Manual for Professionals and Capital-Raising Executives

8

Governance Best Practices

Excellence is an art won by training and habituation. We do not act rightly because we have virtue or excellence, but we rather have those because we have acted rightly. We are what we repeatedly do. Excellence, then, is not an act but a habit.

—Aristotle

This chapter provides an interview-based overview of fund governance and the ways in which many hedge funds are creating more robust checks and balances in their own fund operations to prevent abuse and create a more sustainable business at the same time.

Why important: Fund governance is by far the most consistently ignored part of running a hedge fund as a real business. Every year the importance of having strong governance procedures in place grows, and we see no slowing down or potential reversal of this trend.

BONUS VIDEO MODULE

To watch a video on hedge fund governance best practices and practical strategies, please type this URL into your Web browser: http://HedgeFundTraining.com/Governance

Fund governance is a valuable area to learn more about because most funds have relatively weak internal controls, independent boards, and checks and balance systems in place. Most funds are focused first on managing their portfolio and second on raising capital; operational issues or governance procedures are often afterthoughts or formalities.

Lately the hedge fund industry has been marred by cases of fraud. ...