Finding the right angle

Hedge fund executives can be subjective in their valuations. But to suggest that managers use inaccurate valuations to smooth returns ignores the stakeholders' role, argues Barry Schachter


While a truly objective valuation of a hedge fund is everyone's ideal, the reality falls far short – the scope for subjectivity in valuation is surprisingly broad, however. A hedge fund's stakeholders (traders, investors, general partners and creditors) pay a lot of attention to that scope, because the ultimate distribution of trading gains to these individuals depends on it.

With so many competing interests, the valuation decisions in a fund should usually be fair. Perhaps that's why

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