Valuation Policy Template for Private Fund Advisers
Advisers Act Section 206 and Rules 206(4)-7 and 206(4)-8
Who values the portfolio and how, which methods and sources are used, how often, how overrides and challenges are handled, and how values flow into fees and investor reporting.
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What the rule requires
No rule prescribes how an adviser values client holdings; Rule 2a-5 governs registered funds, not private funds or separate accounts. An adviser's fiduciary duty and the anti-fraud provisions still reach valuations used for fees, performance and investor reports, and Rule 206(4)-8 prohibits misleading investors in a pooled vehicle.
The Commission listed valuation among the areas an adviser's compliance policies should address when it adopted Rule 206(4)-7, and valuation of illiquid assets is a recurring examination focus.
What the policy covers
The sections of Luna's model Valuation policy. Your draft includes only the clauses that apply to your firm.
- 1Purpose, scope and governing documents
- 2Governance
- 3Standard and methodology
- 4Pricing sources and third parties
- 5Frequency
- 6Overrides, challenges and errors
- 7Conflicts of interest
- 8Fees, reporting and marketing
- 9Auditors, records and review
What Luna asks you
A few of the questions that shape the draft:
- Who approves valuations, and whether there is a valuation committee
- How often the firm values each investment
- The accounting framework the funds report under
- Whether the firm uses third-party valuation providers
How drafting works
- 01Answer questions about your firm
Plain questions about how you operate. Where there is a common answer, Luna suggests it; where you are not sure, say so and it is flagged rather than assumed.
- 02Luna drafts the policy
Only the clauses that apply to your firm, in your firm's name, each traced to the rule or choice it comes from.
- 03Review what is left
Anything unanswered is marked in the text and listed for you, and the policy cannot be approved until each is settled.
- 04Edit, approve and roll out
It is your policy: edit it like any other, approve it, and have employees acknowledge it in the same place.
Read the source
Other policies
A summary of what the rule requires, current as of October 2026, so you can see what the policy covers. It is not legal advice. A policy drafted in Luna is your firm's draft to review, edit and adopt.