Castle Hall Alternatives, a leading provider of hedge fund operational due diligence, today published "Hedge Fund Investing in a New World: Five Questions for Investors and Managers."

Chris Addy, Castle Hall's President and CEO, said "the credit crisis and market events over the past year have challenged the hedge fund industry as never before. Alternative investments will remain integral to diversified, institutional portfolios, but there will unavoidably be a re-evaluation of the hedge fund model."

Castle Hall's focus on hedge fund operational risk has helped the firm identify five questions relevant to both investors and managers in this "New World". The firm's White Paper asks whether the typical"2 and 20" fee structure is fundamentally flawed; whether hedge funds need better corporate governance; and whether there is an "expectations gap" in the fund administration industry. The White Paper also questions whether the fund prospectus should be written to protect the manager or the investor and asks if it is possible to hold illiquid assets in an open ended vehicle.

"The structures and conventions accepted in the past may not be the best for the hedge fund industry going forward" said Addy. "We have highlighted a number of areas where current practices are weak and, in the New World, we expect investors to be more vocal and require greater protection and control when allocating to hedge funds. Investors will also focus more intently on operational, structural and business issues in addition to performance and strategy."

Hedge Fund Investing in a New World, the first in a series of thought leadership papers to be published by Castle Hall, can be accessed on our Website, under the Publications section.