Hedge fund solutions can leave you free to power ahead
In their day-to-day tussles with the market, the hedge fund manager has a clear line-of-sight on the objective - to pull in money from the funds entrusted to their care. And in the single-minded pursuit of that objective, it's important that the hedge fund manager is as unfettered as possible from the mechanics of the game. Unfortunately, in the modern hedge fund world, encumbering baggage is all too prevalent. And this is especially a concern for smaller funds where much responsibility can fall on one set of shoulders.
This has meant that as the hedge fund universe has swelled and multiplied, so too have the range of services offered by third-parties, providing packages of hedge fund solutions. The idea is to take some of the burden off of those shoulders, leaving the creative talents of the manager free to be engaged on earning that performance fee. So what sort of consultant and operational services are there on the market?
Compliance is an absolute must for any fund - not just as a box-ticked, but as a genuine commitment; because from that flows the open-minded dealing with investors, that is essential to build your capital pool. But especially for new hands at the game, the devilish detail of SEC compliance and RIA status means a legal team is needed, to ensure you're playing by the book. So this is an essential part of any service solution.
Although most hedge fund managers won't want to devolve the client-relationship side of their business - after all the hedge fund manager is what the investor is buying into - even the raising of funds from investors has the SEC fingerprints all over it. So legal services will also be required for ensuring your promotional activities with investors follows the proper regulatory conduct
The administration of your fund may require outside hedge fund solutions too - especially in the tricky areas of two-tiered accounting standards, and valuation reporting. There are vendors who offer services for such valuation essentials as calculating NAV (Net Asset Value), and treasury monitoring of liquidity and cashflow forecasting. Some also offer bespoke-pricing for more exotic or illiquid trades. Documentary custodian solutions also help to ensure that subscription documents, and NAV share-tracking reports, are being properly maintained.
In addition to such back-office hedge fund solutions, there are a number of software packages that will be needed to support your activities. Customer relations management is one area that comes to mind - and there are a number of CRM packages that are tailored to suit the particular needs of the hedge fund industry. Of course, there is a temptation to put extra resources into the sharp end of your fund - into the software supporting trading analytics, risk and position monitoring, or even risk-adjusted returns reporting.
But you may find the most cost-effective approach, initially, is to focus on packaged-solutions that help to shunt administration firmly into the background. With your time then freed up, to apply your strategy undistracted, this may allow you to hit the ground running, and able to zero-in on maximum returns.