August 07, 2006

Is Hedge Fund Valuation Necessary?

Valuation is fast becoming a critical issue. Only few hedge fund managers can afford to ignore this issue. If you want to avoid dilution and unfairness, valuation numbers must be accurate and unbiased. A key element of monitoring the risk of hedge funds is to understand the valuation used by the concerned funds. Institutional investors always need better and accurate information. Hence, they must have a clear understanding of a hedge fund's valuation process.

Certain institutional investors take the help of liquidity option to make hedge fund valuation more accurate. Critics argue that not all positions in hedge fund operation should be valued. However, there is no doubt hedge fund valuation is necessary in order to improve transparency and reduce risk.

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