Managers still unaware of what constitutes Regulatory AUM for Form PF

Fund AdministrationInvestorsOperational RiskRegulation
23 Apr, 2012

Hedge funds preparing their Form PF are still unaware of what exactly constitutes regulatory Assets under Management (RAuM), according to GlobeOp.

“Managers are confused about what constitutes RAuM despite the Securities and Exchange Commission (SEC) issuing definitive guidelines on the issue. A lot of managers continue to believe RAuM is the same as net asset value (NAV) or their normal AuM measures, which is not the case,” said Vernon Barback, president and chief operating officer at GlobeOp.

“The SEC has clarified RAuM stating it includes all assets on the balance sheet including derivative positions and leverage.  Firms with even modest leverage can therefore have significantly higher RAuM than their normal NAV or AuM measures. This can affect a funds'specific category of filing deadlines, frequency and content, and it is something managers need to become familiar with,” he added.

Form PF deadlines are fast approaching. Hedge funds northwards of $5 billion RAuM must submit their Form PF to the SEC by June 2012, while firms managing over $1.5 billion need to hand in their Form PF by December 2012.

“The big risk is if a fund just shy of $5 billion calculated its RAuM but does not account for leverage or derivative positions, and assumes it does not need to file Form PF until December 2012. If that fund now realises it needs to account for leverage and derivative positions, it could find itself in an uncomfortable position of having to submit Form PF this summer - that is in four months. Some managers might be strapped for time to get all of the data in order for regulators,” commented Barback.

US managers, according to Barback, have familiarised themselves with the rules, although conceded European and UK managers were slightly behind the curve. “Nevertheless, they are catching up with their US counterparts,” he said.


Written by Owen Dickson