“For the benefit of servicing fund of hedge fund managers around the world, we have pulled together the entire client experience under one seamlessly integrated, globally consistent platform,” said Neeraj Sahai, global head of securities and fund services at Citi in a statement issued on Wednesday. “Managers have direct, on-line access to our custody services, our suite of middle-office solutions and all standard administrative reports, resulting in greatly improved efficiency, accuracy, transparency and risk mitigation.”
Hedge fund-of-fund managers are increasingly turning to their third-party administrators to provide them with the automation needed to prove their operational strength – and transparency – to savvy institutional investors.
Many investors, including wealthy individuals, endowment funds, pension plans and charitable funds invest in hedge funds-of-funds for the all-in-one service of researching funds, allocating assets, managing risk and tracking returns.
“Technology ultimately becomes a differentiator between the services which fund administrators,” said Rich Koppel, president of youDevise. “That means far more than just striking monthly net asset values.”
Citi officials say that prior to the implementation of youDevise's Hedge Fund Information Provider (HIP) platform, Citi only provided a basic back-office administration and custody service for hedge funds-of-funds. While the bank will use the same platform to strike the official net asset valuation, through HIP it can allow hedge FOF clients to view and evaluate their data in a more robust way.
That means hedge FOFs can analyze liquidity terms of underlying hedge fund investments; track and analyze underlying fund performance; conduct what-if trade scenario analysis; run pre- and post-trade compliance reporting against investment guidelines; offer real-time dynamic reports on net asset valuations; and automate their foreign exchange hedging strategies for share classes denominated in non-base foreign currency.
Launched in 2006, HIP was first implemented at Northern Trust in Chicago in January 2008. An additional five fund of hedge managers are using HIP directly. HIP is integrated with fund administrators’ transfer, portfolio accounting, and client interface systems.
One of the world’s largest providers of securities services, Citi has $11.3 trillion in assets under custody through a network spanning more than 100 countries and supporting over 65,000 clients. The bank’s hedge fund services unit holds in excess of $60 billion in assets under administration for funds of hedge funds and offers middle office, custody, securities finance, back office, cash and liquidity functions.