Axiom Valuation announces the launch of Alternative Investment Return Authentication Service (AIRAS), a product for investors that analytically tests whether the managers of hedge funds and private equity funds are properly reporting Net Asset Values (NAV’s) and associated returns of their investments.
As noted in 2010 testimony by the General Accountability Office, “One of the major challenges that both hedge fund and private equity investments pose to plan sponsors investing is uncertainty over the current value of their investment.” (GAO-10-915T, p. 9) As increasing numbers of institutional investors seek out the expected higher returns from alternative investments, these challenges will only increase.
AIRAS is the first product to deliver objective and empirical analysis based on established financial research and mathematical optimization of whether the return and NAV’s reported by the manager are reported properly based on a manager’s reported investment allocations (by industry, by country, and by asset type). AIRAS provides investors with an independent authentication of what its Alternative Investment (AI) managers are reporting – hence its slogan of “Trust But Verify”.
According to Dr. Stanley Feldman, Chairman of Axiom Valuation, “AIRAS would have discovered the Madoff fraud early on, because the reported returns were not consistent with Madoff’s reported investment strategies.” Axiom Valuation has produced a research paper about the Madoff case. To request a copy, please click here: http://www.avairas.com/articlerequest.asp?aid=madoff_article.
The AIRAS report in a hedge fund or private equity fund provides four essential elements for investors in that fund:
1) An objective rating of whether the fund’s returns and NAV’s are reported correctly that enables the investor to meet his/her requirement under FAS 157/ASC 820 to “understand the inputs used … to value the investments and then determine whether these inputs are appropriate for measuring and reporting the fair value.” (AICPA: FASB Statement No. 157, Fair Value Measurements Plan Sponsor FAQ)
2) Clear documentation of the analysis process so the investor’s auditors can easily and cost effectively review the AIRAS findings as the basis of their testing of whether reported AI values are valid.
3) An empirical framework for reviewing with AI managers if their reported returns are not consistent with their reported investment allocations.
4) Peace of mind that comes from transparency.
AIRAS reports are very cost-effective, as the report cost is spread over the potential client base for each AI fund. For more information, please contact: Dr. Stanley Feldman or John Roberts at 781 486-0100 or visit http://www.avairas.com.
About Axiom Valuation
Axiom Valuation is a financial security and business valuation firm. Founded in 1999, the company is based in Wakefield, Massachusetts, USA. The company is a global leader in the development of analytical tools based on empirically-driven financial models for determining fair value.