Asset Servicing Firms Offer Valuable Aid in Hedge Fund Management

Evolution is inevitable when it comes to hedge fund management, a sector marked by fast-changing investor demographics, market reform in both emerging markets and developed markets, and the convergence of products and strategies within asset management and other sectors. While these factors present new opportunities that could drive growth, hedge funds are further challenged to constantly adapt to changes and provide the most favorable investment terms. Fortunately, there are asset servicing firms that could now very well support their operations, vision, and commitments to clients. From cutting-edge compliance monitoring tools, to performance and risk analytics for alternatives, to accounting and reporting management systems, asset servicing providers can offer trusted middle- and back-office solutions that are well-positioned to help both the buyers and the sellers of alternative investments. Additionally, in light of the challenges brought by increasing operational and regulatory costs, technology and outsourcing continue to serve as primary tools that managers are utilizing to develop a more competent and cost-effective operating model. Assistance in regulatory complexity, transference of operational risk, and the benefits from the expanded set of features and functionality offered by third-party providers are also some of the factors that drive this trend. In the last three years alone, 25 to 30 per cent of hedge funds are in the process of outsourcing back- and middle-office operations, according to WallStreetAndTech. “We believe this is where the market is going. Our expertise, budget, staff, discussions are all centered on helping clients understand outsourcing, introducing them to providers we think are good and have the technology to offer control,” explains Gary Brackenridge, a global head of business for hedge funds. Efficient hedge fund management is expected to become more crucial in 2016 as nearly half of hedge fund firms plan to launch new funds. With the soaring U.S. interest rates, credit defaults and volatility, managers are more challenged to make the most out of the opportunities provided by the financial landscape. Investors are becoming more prudent about how and where they invest, and hedge fund managers have the responsibility to strategically think about where they should allocate those assets and what mechanisms should be utilized to sell their funds. With the help of asset servicing firms’ middle- and back-office solutions, a comprehensive documentation, analysis and reporting of all essential data could pave the way for the development of meaningful decisions and proficient strategies that could help achieve clients’ investment objectives.