We believe that one of the most important conversations we have with an investment manager is prior to our appointment to a board. Given the nature of the hedge fund industry, where the investment manager, rather than investors, typically engages the directors, there is the potential for conflicts of interest. Therefore we always ensure that the investment manager appreciates that we owe a fiduciary duty to the fund as a whole, which includes a responsibility to ensure that investors are treated equitably, even when this may conflict with the interests of the manager.
However, consistent with this duty, we are able to provide substantial value to the investment manager, by recommending best practices with regards to structuring, service provider selection, and operational infrastructure.
We believe in spending as much time as is necessary with the manager throughout the start-up process and, where requested, in giving impartial advice across all aspects of the project. In this way the manager benefits from our expertise and experience, and we benefit from having a greater understanding of the strategy, infrastructure and individuals involved, thus helping us to discharge our duties more effectively and provide the level of corporate governance expected by the most demanding of institutional investors. We also aim to develop an equivalent level of insight into the manager and fund when we are asked to join the board of an existing fund.
We believe that working with a manager and nurturing a relationship of professionalism and respect is the best way to resolve potential conflicts efficiently and effectively.