Getting the right balance of hedge fund tools
Maximizing returns means maximizing earns, for hedge fund managers. And so quite rightly much of their attention is focused on wringing the best performance from their strategy, as market conditions twist and turn. But whether the fund is an ongoing thriving concern, or in the process of leaping from concept to real-world trading, it's important to make sure all the cogs are turning with maximum efficiency. That means having the right hedge fund tools to tune all aspects - from investor management, to fund promotion, to filing tax returns, to staying on top of your trading game
For those starting out with a hedge fund, it is the soft skills of expert advice, training and services that may be most in demand from the hedge fund tools box. Although a light-touch regulatory regime is part of what defines hedge funds, expert advice needs to be sought on issues such as SEC compliance and the need for RIA (Registered Investment Advisor) status. So a suitably hedge fund-cultured legal team is essential.
The accounting requirements of hedge fund operation can also be quite technical, especially in relation to the filing of investor tax returns. So advice on auditing requirements is another area where the hedge fund manager will need to draw on authoritative professionals. Additionally there are the operational issues that surround fee structures, the selection of the prime brokers, and the fundamental issue of attracting investors - and funds - through SEC compliant promotional activities.
It is no wonder that many new-starts turn to using consultancy services, to help build a package of professional support for their incipient fund. But equally, many ongoing hedge funds can benefit from reassessing and redeploying elements of the professional team, to adjust to changing operational requirements.
Another key component of the hedge fund tools set is the software that will help deliver the results you need. That includes trading tools and analytical software, needed to support day-to-day trading activity - but it may also include applications to metric your risk, and convey your strategy to investors, both potential and current.
Other software systems that may ease the administrative burden of the fund include customer relationship management (CRM) and accountancy packages. Such solutions have shown dramatic cost reductions, due to recent innovations in deploying software through the web. As a result, funds across the spectrum of size and complexity can draw on the benefits of these productivity-enhancing tools.
Finally, the hedge fund manager themselves must not stand still, in an industry prone to revolution as much as evolution. It is important you make the most of resources available to keep you up-to-speed - and present - in the hedge fund community. On-line analytical resources can keep you connected to shifting investment techniques, as they adjust to dynamic market developments. Workshops, seminars and conferences will keep you networked, tuned-in to opportunities as they arise - and help to create the buzz needed draw investors to your fund.
In the end, it's all a question of finding the correct complement of tools to kit out your hedge fund - and making sure those tools are fit for your purpose. Once that is achieved, the good workman will find it a breeze to make light of the task at hand - earning the best returns for their investors, and for themselves.