AIMA, ACC publish guidance on valuing alternative investment fund assets

The Alternative Investment Management Association (AIMA), the global representative of alternative investment managers, and its private credit affiliate, the Alternative Credit Council (ACC), have published new guidance for fund managers in valuing their investments.

The new AIMA Guide to Sound Practices for the Valuation of Investments contains a series of recommendations regarding valuation governance, transparency, procedures, processes and systems and sources, models and methodology.

A number of recommendations from the guide’s previous edition in 2013 have been updated to reflect the evolving valuation process and changes in the regulatory environment, including the Alternative Investment Fund Managers Directive (AIFMD).

Additionally, the industry has become more diversified and supports a larger number of investment strategies – approximately 35 categories, according to data providers. With that in mind, the AIMA/ACC guide contains sections on valuation considerations applicable to private credit, derivatives and illiquid assets.

The guide, now in its fourth edition, is sponsored by PwC.

AIMA’s CEO Jack Inglis said: “Although the significant challenges that arose immediately following the financial crisis have been moderated by new regulatory requirements and the passage of time, valuation remains a continuing area of regulatory, accounting and investor scrutiny.”

Mr Inglis added: “This guide is an essential tool for fund managers. Our recommendations on valuation, which we have developed over time, have been recognised and acknowledged globally by regulators. They reflect sound practice in fund valuation in the current environment.”

Olwyn Alexander, Global Asset and Wealth Management Leader, PwC, said: “Since the last edition in October 2013, much of the regulatory change arising from the global financial crisis has now been embedded into practice. We have also seen increases in the numbers and types of illiquid assets held by alternative asset funds and the guide seeks to provide direction on the valuation of such assets.  This new edition of the guide reflects the practical implementation of these changes and also addresses the process for valuation challenges.”