Section A - Creating and Managing a Hedge Fund Business » 1. Management and Controls » 3. Outsourcing

Provider: MFA

Practice:	Guidance:
A Hedge Fund Manager should have appropriate approval processes and documentation for retaining sub-advisers and other external portfolio managers.	A Hedge Fund Manager should develop due diligence and approval processes for selecting and retaining a sub-adviser or other external portfolio manager to manage any capital over which the Hedge Fund Manager has investment discretion. When a Hedge Fund Manager invests such capital with an external portfolio manager in a managed account, the Hedge Fund Manager should clearly define in a written agreement with the external portfolio manager the trading restrictions and limits, reporting requirements, and termination provisions applicable to their relationship.

Practice:

Guidance:

A Hedge Fund Manager should have appropriate approval processes and documentation for retaining sub-advisers and other external portfolio managers.

A Hedge Fund Manager should develop due diligence and approval processes for selecting and retaining a sub-adviser or other external portfolio manager to manage any capital over which the Hedge Fund Manager has investment discretion.

When a Hedge Fund Manager invests such capital with an external portfolio manager in a managed account, the Hedge Fund Manager should clearly define in a written agreement with the external portfolio manager the trading restrictions and limits, reporting requirements, and termination provisions applicable to their relationship.