Hedge Funds - Part 2 - Process and Policies Due Diligence

1. Hedge funds trade securities in volumes that are a multiple of their traditional asset management counterparts. In addition, hedge funds have less regulatory oversight than traditional asset managers.

2. A sound operational due diligence (“ODD”) process can serve as an effective mechanism to mitigate the risk of investing in hedge fund frauds. 

3. Here are some detailed insights and recommendations pertaining to Due Diligence practices on hedge fund managers focusing on their policies and process.

Hedge Funds - Part 1 - Basic Risks and Due Diligence

1. Hedge funds are unregulated investment pools. They generally are more nimble and dynamic in their trading strategies than other investment funds.

2. Hedge funds are successful only if they make money in both up and down markets. To do this, they employ some creative and risky investment strategies—selling short, using leverage, trading put and call options, trading futures and investing in emerging markets. 

3. Here is some information about hedge funds and their risks CPAs can use to evaluate the suitability of this investment for their clients.

Solar Energy Global Demand and Value in the Supply Chain

1.  Malaysia is ranked number three in the world in the solar manufacturing industry with China at number one and Taiwan in second place.

2. In 2015, 48 solar projects had been implemented with total investments of RM28 billion to produce solar wafers, cells, modules and system components subsequently in 2016 Mida attracted seven solar manufacturing projects and 83 renewable energy projects in the solar industry worth RM1.77 billion and RM650 million.

Asset Liability Mismatch and Management

ASSET LIABILITY MISMATCH IN BANKS SYSTEM

1. Mismatch occurs when the tenure of maturing loans do not match the tenure of the sources of funds on the liabilities side. The liabilities side of the balance sheet of a bank includes sources of funds and for a bank one of the main sources of funds are the deposits.

2. From 2010 onwards with the economy recovered, disbursements of infrastructure loans were sanctioned by banks to projects such as power and roads had duration between 10 and 15 years. However, deposit tenures were getting shorter and this huge disparity in tenures between assets and liabilities created the instability in banks’ balance sheets.

3. Countries pegging interest on deposits to market-determined rates has resulted in a fall in the rates and deposits are now of shorter tenure. With the de-regulation of interest rates, most depositors are not looking beyond one or two years. 

4. Constant monitoring and periodic evaluation of its investment portfolio is important for a bank as many of its short-term liabilities are met through this resource.