Deloitte Releases Alternative Investment Digest for Advisers and Fund Directors

Deloitte recently released a digest for mutual fund directors and investment advisers covering the oversight of alternative investment products. As the digest notes, “traditional mutual fund shops have continued to expand their product lineups to include alternative products in the form of interval funds, private equity, private debt, infrastructure, natural resources, and real estate funds, as well as business development companies (BDCs). The digest examines areas of challenge for these products and investments, as well as how the SEC’s Rule 2a-5 could allow fund groups to revisit and refine their current practices. The adopting release for Rule 2a-5 states “Rule 2a-5 sets forth certain required functions that must be performed to determine the fair value of the fund’s investments in good faith.” Some of the requirements the digest examines include:

  • Periodically assess and manage valuation risks
  • Test fair value methodologies for appropriateness and accuracy
  • Pricing services oversight
  • Board valuation oversight

The digest notes fund boards may want to pay particular attention to “the valuation of private equities and private credit investments.” Other key considerations for boards specifically include impact of inputs and assumptions to determine valuation, adequacy of resources, potential conflicts for members of the valuation team, and appropriateness of the model employed.

Click here to read Deloitte’s Alternative Investment Digest.