06 May 2020

Conflicts of Interest in Parallel Funds

How the Alternative Investment Standards address these issues and examples of additional measures managers can take.

When asset managers run parallel funds, for example a managed account and a commingled fund running the same strategy, there are conflicts of interest that will arise and must be managed and mitigated appropriately. The SBAI Alternative Investment Standards were updated in 2015 to account for these and this memo looks at how the Standards address these issues.

In addition, the memo provides examples of additional measures that asset managers can take to strengthen their management of these conflicts in areas such as trade allocation, compliance, and fund governing body oversight.

It also provides investors with a list of questions that can be used to assess these controls during the due diligence process.