The SEC also expects alternative funds to follow a regulation that generally requires mutual funds to send payments to investors within seven days after they redeem shares.
Champ said funds that invest too heavily in illiquid assets should consider appropriate steps to ensure they can in a timely manner pay investors who redeem their shares, as well as other obligations.
The SEC will also look into the quality of fund governance. For example, a fund's board of directors must review and approve the fund's compliance program, Champ said. He said that boards should also steer clear of misleading fund names that suggest protection from losses, among other promises.
In January, the SEC issued a risk alert directing investment advisers to be cautious when they conduct due diligence on alternative investments.