Tue, May 22, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: Chasing shadows: should hedge funds shadow administrators?

Wednesday, March 27, 2013

This article was provided by Bijesh Amin, Co-Founder/Managing Director at Indus Valley Partners.

To shadow or not to shadow

At least that is the question facing many large hedge funds with assets well above the magical $1bn mark.

The production of a portfolio NAV (Net Asset Value) is the basis upon which investors pay fund managers their performance fees on the one hand and often the basis upon which they give capital to funds on the other. The majority of hedge funds use a Fund Administrator (e.g. Citco, GlobeOp, BNY Mellon etc.) to calculate their NAV and in some cases perform a range of portfolio accounting functions, reconcile their trades, and prepare investor reports.

Investors will often insist on the use of a fund administrator given they can be seen as an impartial 3rd party to value portfolios, and in light of well-documented be a sensible requirement.

However the handing over of such a key metric such as NAV is causing sleepless nights for many funds, particularly those trading illiquid assets (which can be price that can be seen from a Bloomberg terminal or Level 3 assets in valuation parlance). Portfolio managers may be loathe to hand over the basis on which their performance fees are calculated to people who do not trade the asset classes for a living and have probably never been practically or academically trained in the valuation of those assets.

So naturally the question arises that even if an administrator is being used, should a ......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. News Briefs - Warren Buffett: Target date funds aren't the way to go, Cambridge Analytica could be reborn under a different name[more]

    Warren Buffett: Target date funds aren't the way to go Planning for retirement can be complicated and stressful. This is why target date funds - funds that are managed based on when you expect to retire - are so attractive. Over time, the balance of stocks, bonds and cash evolve automati

  2. Investing - Hedge funds hike Smurfit Kappa positions amid takeover deal hopes, Hedge fund IBV Capital digs deep to unlock long-term value in a competitive market, Eisman of 'The Big Short' fame recommends shorting Deutsche Bank[more]

    Hedge funds hike Smurfit Kappa positions amid takeover deal hopes From Irishtimes.com: Two US hedge funds, Davidson Kempner and York Capital, have accumulated a combined 4.74 per cent interest in cardboard box maker Smurfit Kappa using financial derivatives. It comes as many investors cl

  3. Foundations of hedge fund managers gave big to controversial donor-advised funds[more]

    In the world of philanthropy and tax-deductible charitable giving, the explosion of donor-advised funds has touched off intense debate. Now, there is evidence that the DAF boom is being further fuelled by hedge fund foundation money. Four of the top five foundations that gave the most to large do

  4. Study: For hedge funds, smaller is better[more]

    From Institutionalinvestor.com: The smaller the hedge fund is, the better its performance is likely to be, according to a new study. The study - "Size, Age, and the Performance Life Cycle of Hedge Funds," released April 26 - sought to determine whether a hedge fund's size and age had any effect on i

  5. Hedge fund returns rose in April for first gain since January[more]

    From Bloomberg.com: Bloomberg Hedge Fund Database shows returns flat this year - Currency strategies had the biggest monthly gain at 13% Hedge fund returns increased 0.78 percent in April, reversing two consecutive monthly declines. The swing of 134 basis points was driven by gains in all seven