As competition within the hedge fund market intensifies, fund managers are facing growing pressure to not only deliver strong investment returns but also demonstrate strong operational performance. The increasing complexity of funds, combined with heightened regulatory scrutiny and shifting investor expectations, has significantly raised the operational demands on managers. In this evolving landscape, fund managers must now balance the challenge of generating investment alpha with maintaining operational excellence—a factor that has become a critical differentiator in attracting and retaining capital.
By optimizing operational workflows, enhancing data integrity and ensuring regulatory compliance, partnering with the right fund administrator enables managers to focus on investment strategies while improving overall efficiency. With investors paying closer attention to operational transparency and due diligence, a well-managed operational framework is just as vital as strong investment performance. In today’s competitive environment, fund managers prioritizing operational alpha alongside investment alpha are better positioned to thrive and deliver sustainable value to their investors.
A solid technology infrastructure is key to operational performance—automation capabilities, integration, accounting accuracy, processing speed and data integrity all depend on a firm’s technology platform. Firms should choose a platform with a robust accounting system capable of supporting complex strategies and fund structures, an investor accounting and servicing system, an investment and accounting book of record (IBOR/ABOR) to ensure that everyone is working with consistent and reliable data, and a global, multi-strategy, multi-currency trade order management system (OMS) that supports the entire trade lifecycle.
The challenge to such an infrastructure is that it can be expensive to implement and maintain in-house, burdening IT resources and limiting growth. Many hedge fund managers are turning to managed services and outsourcing/co-sourcing to access the agility and efficiency of advanced technologies while simultaneously reducing operational overhead and risks.
Choosing the right strategic partner requires due diligence. The right partner should have six key attributes to deliver the success you need.
- A track record of strategic partnerships with hedge funds – Choose a partner that has demonstrated an ability to serve clients of all sizes and every stage of growth.
- Breadth and depth of expertise – Look for a partner that can provide experienced teams specializing in hedge fund accounting, NAV calculation, tax requirements and regulatory compliance.
- Flexible outsourcing model – The right partner should offer the flexibility to work with your needs, such as maintaining certain workflows and processes in-house while outsourcing others.
- Global network – Don’t limit yourself to only a handful of jurisdictions. Choose a partner that can allow you to grow into any domicile around the globe.
- Technological strength – Your partner should have proven solutions for hedge fund accounting, trading and data management, as well as the resources and commitment to continually invest in new technologies.
- Systematic onboarding and migration process – Choose a partner that can get you up and running quickly, with documented methodology and proven success in hundreds of hedge fund implementations.
To learn more about what to look for in a strategic partner to improve your operational efficiency, download our "Competing to Win" whitepaper.
