Institutional Investor's Alpha Magazine - October 2007 - (Page 63)

HedgeFund Administration {DELIVERING ADDED VALUE } n a challenging global investment market, hedge fund managers are building partnerships with knowledgeable service providers that can help them value complex instruments, monitor performance, enhance transparency and reduce operational risks. In turn, administrative firms are investing in versatile technology platforms and hiring knowledgeable professionals who can help fund managers execute today’s multifaceted hedge fund strategies. “At the very basic level, hedge fund managers are looking for a high level of customer service from their provider,” says John Buckley, chief financial officer at Citadel Solutions in Chicago.“They want to deal with an administrator that understands their fund and can control and monitor activity across asset classes and geographies.” In a period of global asset growth, as well as increased market volatility, fund managers are increasingly relying on third-party administrators who can streamline basic services while delivering additional value, such as greater transparency. “One reason for this growth in third-party services,” says Mark Lancaster, director of new business development at Fortis Prime Fund Solutions in New York, “is their value in the eyes of the investor, such as having an independent organization preparing the books and records and verifying the existence of the fund’s investment holdings.” I Concerns about subprime lending in the US have led fund managers and institutional investors to put more focus on valuation, risk reporting, risk management and portfolio modeling, according to Gary Enos, executive vice president and head of State Street's hedge fund servicing business in Boston. “There is more interest in transparency as it relates to valuation, and the entire process is being looked at more carefully,” he adds. Consolidation among hedge fund administrators and service capacity issues appear to be dividing the service marketplace into large global players and smaller niche administrators. Bob Donahoe, New York-based managing director for Citi’s hedge fund business development in North America, says fund managers are looking for large global players with the size, scope and scale to match their requirements. “They want a provider who is exposed to different strategies and securities and is familiar with funds domiciled in a variety of locations,” Donahoe notes. Many managers are also looking for “one-stop” value-added services from a global provider, such as the ability to provide custody for funds of funds and lines of credit, or integrated cash management services. On the other hand, there clearly is still a need for boutique providers.“The larger, more established hedge fund administrators are protecting capacity and focusing mostly on larger institutional hedge fund managers,” says Dylan BY RICHARD WESTLUND October 2007 • This Sponsored Report was prepared by the Special Projects Department of Alpha and written by Richard Westlund, a journalist based in Miami.

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - October 2007

Institutional Investor's Alpha Magazine - October 2007 Contents Letter from the Editor Longs & Shorts Pension Corner: Applied Knowledge The Good Guys: Autism Advocate Interview: Nerves of Steel Cover Story: Ivy League Education Alpha Awards: Top Service Providers: Trying Times Strategies: Passage to India Profile: The Oracle of Irvine Alpha Bytes: Futurama Research Center: Funds of Funds 50 Unhedged: Commentary: Crisis? What Crisis?

Institutional Investor's Alpha Magazine - October 2007

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