Funds Hub

Money managers under the microscope

A change of Mood


Rating agency Moody’s has updated its hedge fund ratings process in the wake of the Madoff fraud and the collapse of Lehman Brothers.

rtrctsgThe firm, which rates hedge funds on their operational risks, is putting more emphasis on certain aspects which it thinks could be key to investors.

For instance, having previously looked at 10 different categories of risk, the firm has narrowed this down to five — operations, valuations, risk management framework, corporate functions and service providers.

A hedge fund must now do consistently well in all of these categories, and not just in most of them, to get a high rating for operational risk overall.