Hedge fund news: Asset servicing helps address the latest performance slump

A web search for “hedge fund news” is a simple way of getting a snapshot of the industry’s current landscape, and lately, the pendulum seems to have swung back into “doom and gloom” mode. Although there have been some good news in the press, such as the increasing number of billion-dollar hedge funds, these have been overshadowed by disheartening updates. Ups and downs Hedge fund underperformance in the first quarter of 2016 has been widely reported and is believed to continue; in a Bloomberg interview, the Blackstone Group LP president Tony James said that the industry could shed up to a quarter of its assets under management in 2017 due to weak performance. Such news has generated criticism of this particular investment model and of the high fees of its management teams. Investors have turned wary; the insurance industry and pension funds (notably CalPERS and NYCERS) are beginning to pull their money out of hedge funds. While heightened competition among firms remains, the industry’s volatility is such that some have been forced to close down even before turning a profit. Despite headlines titled “Divorcing Your Hedge Fund Manager”, news proclaiming the death of the hedge fund is nothing new; in January 1970, Fortune Magazine published an article declaring “Hard Times Come to the Hedge Funds”. An upturn could be just around the corner, so in the meantime, what can the industry do to weather this recent round of slumps? In order to keep clients and find additional assets to oversee, the pressure is on for the hedge fund manager to meet – and ideally even exceed – expectations. Established solutions Streamlining the middle and back office operations and amplifying overall efficiency are strategies that enable mangers to make the right call with their funds. Calling on asset servicing companies with an established record of providing top-of-the-line data management and fund administration solutions is an approach that can cut firms’ operational costs and increase their access to meaningful data. Through asset servicing, hedge fund managers can benefit from investor relations, performance and capital reporting, and regulatory compliance services. Business and technology consultancies are also on offer, as well as cloud-based technologies that include data repositories and attribution reporting portals. Coupled with all of these is high-touch client care, ensuring maximum operational support around the clock. Truly, with asset servicing becoming more mainstream among portfolio managers, hedge fund news is set to improve in the coming years.