Center for Financial Policy and Mutual Fund Directors Forum Partner to Present
Oversight of Alternative Investments Roundtable
On Wednesday, November 28, 2012, the Center for Financial Policy and the Mutual
Fund Directors Forum co-hosted the Oversight of Alternative Investments Roundtable
at the Ronald Reagan Building in downtown Washington DC. The program explored the
unique issues that alternative investments present to fund directors, particularly
risk oversight issues, and provided practical information for directors.
Nancy Szmolyan, a Senior Practice Expert at McKinsey & Company, opened the roundtable
with a discussion based on “The Mainstreaming of Alternative Investments: Fueling
the Next Wave of Growth in Asset Management,” a report produced by McKinsey & Company’s
Financial Services Practice. She spoke about the resurgence and mainstreaming of
alternative investments, the use of alternative investments for growth, and key
challenges that these investments present for asset managers.
Distinguished academic speakers at the roundtable included Neil Pearson, Harry
A. Brandt Distinguished Professor of Financial Markets and Options at the University
of Illinois and Laura Starks, Charles E. & Sara M. Seay Regents’ Chair at the University
of Texas at Austin. Neil Pearson spoke to the roundtable’s participants about valuation
issues in alternative investments. He explored topics such as embedded fees and
the risks associated with illiquid, one-way markets. Laura Starks presented a talk
about alternative investments in retirement funds. Her talk included information
about the importance of retirement plans, retirement income and risks, asset allocation
choices, and behavioral opportunities and risks.
Partners from Ropes & Gray LLP moderated two panels during the roundtable. The
morning panel session explored the characteristics of a variety of alternative products,
including Absolute Return Funds, Long/Short Funds, Managed Futures Funds, Commodity
Funds, Market Neutral Funds, Multi-Strategy Funds, and Registered Fund of Hedge
The panelists also explored key challenges for board members associated with
these funds such as risk management and performance measurement. The afternoon panel
session delved into board oversight of alternative investments, covering a range
of topics including volatility strategies; counterparty, administrative, and legal
risks; evaluation of portfolio managers; and compliance issues.