There is a new dynamic today between hedge funds, investors and hedge fund administrators, according to
In the post-crisis environment, there are six key criteria that will drive operational and risk management elements for hedge funds, according to State Street: investment strategy and performance, portfolio liquidity, portfolio transparency, new pricing and lockup periods, operational due diligence and the independence of custodians and administrators.
“The theme of transparency in the hedge fund and hedge fund-of-funds market continues to grow,” said Jim Tomeo, chief operating officer and senior portfolio manager at
George Sullivan, executive vice president and head of State Street’s alternative investment solutions group, added, “Institutional investors are increasingly taking great interest in how hedge funds manage operational infrastructure, choose administrators and provide for governance and best practices. Escalating client demand for operational control and transparency is driving funds to outsource many responsibilities in all asset types and investment strategies. By hiring administrators to assume a range of services, including data management, asset class coverage and portfolio risk analysis, fund managers can concentrate on generating alpha and distributing investment products.”