Chapter 15: Hedge Fund Operational Excellence

In this section

• Best Practices in Risk Monitoring and Governance
  Best Practices in Risk Monitoring and Governance (CFA Level 1): Value of a Formal Risk Governance Framework, Comprehensive Risk Policies and Coverage, and Fostering a Robust Internal Control Environment. Key definitions, formulas, and exam tips.
• Technology, Data Analytics, and Trade Execution
  Technology, Data Analytics, and Trade Execution (CFA Level 1): Core Technology Infrastructure, Architecture and Scalability, and Low-Latency Platforms. Key definitions, formulas, and exam tips.
• Hedge Fund Failures and Lessons Learned
  Hedge Fund Failures and Lessons Learned (CFA Level 1): Key Hedge Fund Collapses, Long-Term Capital Management (LTCM), and Amaranth Advisors. Key definitions, formulas, and exam tips.
• Investor Communications and Transparency
  Investor Communications and Transparency (CFA Level 1): Role of Clear, Timely, and Consistent Reporting, Monthly and Quarterly Insights, and Real-World Anecdote: Late Reporting Debacle. Key definitions, formulas, and exam tips.
• Best Execution Standards and Broker Selection
  Best Execution Standards and Broker Selection (CFA Level 1): Key Components of Best Execution, Formal Best Execution Policy, and Transaction Cost Analysis (TCA). Key definitions, formulas, and exam tips.
• Counterparty and Clearinghouse Relations
  Counterparty and Clearinghouse Relations (CFA Level 1): Building a Strong Foundation with Prime Brokers, Key Considerations, and Understanding Clearinghouses. Key definitions, formulas, and exam tips.
• Leadership and Culture in Fund Management
  Leadership and Culture in Fund Management (CFA Level 1): Role of Leadership in Shaping Culture, Quick Anecdote, and Fostering Integrity and Accountability. Key definitions, formulas, and exam tips.
• Review of Regulatory Filings and Documentation
  Review of Regulatory Filings and Documentation (CFA Level 1): Regulatory Landscape, Maintaining a Regulatory Calendar, and Internal Documentation Review. Key definitions, formulas, and exam tips.
• Optimization of Management and Incentive Fees
  Optimization of Management and Incentive Fees (CFA Level 1): Objectives of Hedge Fund Fee Design, Understanding Key Concepts, and Core Components of the Fee Structure. Key definitions, formulas, and exam tips.
• Multi-Jurisdictional Compliance and Registration
  Multi-Jurisdictional Compliance and Registration (CFA Level 1): Understanding Regulatory Requirements Across Jurisdictions, Key Global Regulatory Regimes, and United States: SEC Requirements. Key definitions, formulas, and exam tips.
• Conflict of Interest Policies and Internal Controls
  Conflict of Interest Policies and Internal Controls (CFA Level 1): Why Conflicts of Interest Matter, Common Types of Conflicts in Hedge Funds, and Personal Trading. Key definitions, formulas, and exam tips.
• Disaster Recovery and Business Continuity Plans
  Disaster Recovery and Business Continuity Plans (CFA Level 1): Why Business Continuity Matters, Core Elements of a Hedge Fund BCP, and Risk Assessment and Identification. Key definitions, formulas, and exam tips.
• Service Provider Selection and Fee Negotiations
  Service Provider Selection and Fee Negotiations (CFA Level 1): Evaluating Potential Service Providers, Reputation, Track Record, and Expertise, and Technology and Operational Capabilities. Key definitions, formulas, and exam tips.
• Parallel Funds and Offshore Structures
  Parallel Funds and Offshore Structures (CFA Level 1): Understanding the Purpose of Parallel Funds, Key Drivers for Parallel Fund Structures, and Maintaining Strategy Consistency. Key definitions, formulas, and exam tips.
• Operational Audits and Controls Testing
  Operational Audits and Controls Testing (CFA Level 1): Key Components of Operational Audits, External Auditor Engagement, and Selecting External Auditors. Key definitions, formulas, and exam tips.
• Ongoing Due Diligence from the Investor Perspective
  Ongoing Due Diligence from the Investor Perspective (CFA Level 1): Why Ongoing Due Diligence Matters, Key Areas to Evaluate, and Portfolio Risk Exposures, Liquidity, and Style Consistency. Key definitions, formulas, and exam tips.