How Private Fund Managers Can Avoid Common Pitfalls When Calculating and Advertising Internal Rates of Return

Presentation of performance information to prospective and current investors is a perennial focus of SEC scrutiny. A recent ACA Compliance Group (ACA) program discussed the process of calculating and presenting internal rates of return and other performance information from a compliance perspective, as well as common pitfalls in those calculations and presentations. The program was moderated by Gabe Glass, senior principal consultant at ACA Performance Services, and featured Ken Harman, principal consultant at ACA, and James Hendricksen, manager at USAA Real Estate Company. This article summarizes key points raised by the panelists. For additional recent commentary from ACA, see “Compliance Corner Q3-2017: Regulatory Filings and Other Considerations That Hedge Fund Managers Should Note in the Coming Quarter” (Jul. 20, 2017); and our two-part series covering ACA’s 2017 Fund Manager Compliance Survey: “Continued SEC Focus on Compliance, Conflicts of Interest and Fees, and Common Measures to Protect MNPI” (Jun. 1, 2017); and “Variety in Expense Allocation Practices and Business Continuity Measures” (Jun. 8, 2017).

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