The global network of sovereign wealth funds has forged a relationship with the Hedge Fund Standards Board, in part to help to foster a constructive dialogue with hedge funds, and to give sovereign wealth funds a voice in the setting of hedge fund standards.
The relationship, between the HFSB and the International Forum of Sovereign Wealth Funds, will help to ensure that sovereign wealth funds are active participants in HFSB activities and in the process of setting standards for the hedge funds industry.
The International Forum of Sovereign Wealth Funds' 31 member funds represent about $5.5 trillion in assets — about 80% of assets held by sovereign wealth funds across the globe. The HFSB sets the standards for the hedge fund industry, and is supported by more than 60 institutional investors, representing $2 trillion of assets; and by more than 120 hedge fund managers, with a collective $800 billion in assets.
The relationship with the IFSWF “increases our dialogue with SWFs as an important hedge fund investor group,” said Thomas Deinet, executive director of the HFSB, in an e-mail. The board's investor chapter currently includes several sovereign wealth funds that “provide valuable input.”
The relationship will see the two parties collaborating on topics of common interest. Mr. Deinet used the example of the HFSB's recent work on addressing conflicts of interest, and around transparency reporting, which “directly benefit the SWF community and other investors. Therefore, the input from the SWF community into the HFSB's process is crucial to continue to improve practices to the benefit of all investors,” he said. Direct engagement with the sovereign wealth fund community, and the opportunity to learn from each other and share knowledge, were also highlighted as desired outcomes of the relationship.
A spokesman for the IFSWF said the forum has similar relationships with the International Monetary Fund and the World Bank.
“We are delighted to form a closer relationship with the HFSB to share knowledge and experience with the objective to raise standards in the financial industry,” said Adrian Orr, IFSWF chair and CEO of the New Zealand Super Fund, Auckland, which has NZ$28.1 billion ($19.4 billion) of assets. “This relationship will help ensure that sovereign wealth funds have a voice in the hedge fund standard setting process.”