Building the trust of client investors through asset services for hedge funds
Posted by Louie Drake on Wednesday, March 22, 2017 Under: Business
At the peak of the financial crisis, hedge funds became highly unpopular, at least in the United States. Now that the country has been making significant strides towards economic recovery, the hedge funds sector is also poised to regain the trust of the public, and most importantly, the client investors.
One of the ways hedge fund managers have been rebuilding this trust is by tapping asset servicing firms. Here is why it is worth the investment:
They ensure compliance to complex regulations. Through heightened regulation, authorities sought to prevent practices that would create bubbles, or promote unsustainable trading activity. The Dodd-Frank Act, cited as the most significant financial reform legislation, outlines policies for ensuring the liquidity of assets to easily distribute to the investors in the event of crisis. Not all hedge funds have the luxury of time to devote to complying with these often complex policies. But with asset servicing firms as an outsourcing partner, they can always assure their client investors that compliance is being taken care of by an expert independent party.
They allow the hedge fund managers to focus on strategic functions. Asset servicing firms take over the tedious day-to-day operations, especially the middle and back office functions such as transaction recording, trade and accounts reconciliation, tax reporting, preparation of financial statements, risk assessment, and accounting. And because they are not burdened by these tasks, hedge fund managers can then train their focus on core functions, such as client relations, making investment decisions, or crafting the firm’s overall business strategies. It makes for a good pitch to convey to prospective client investors: “We can accomplish big things because we have got the small things covered.” Furthermore, they have more time for communicating with clients.
They provide technologies for the precise completion of tasks. Through asset servicing, hedge funds can employ the latest innovations in accomplishing tasks. They can show these to the client investors, too. For instance, a Cloud-based portfolio management system may be made accessible for the investors to also monitor the performance of their funds. In an era where technology is key to being a step ahead of the competition, having access to cutting-edge tools will definitely impress clients and reassure them that the hedge fund manager is truly invested in its work.
Rebuilding trust in hedge funds may indeed take some time. But with asset services, the task is now easier to accomplish.
One of the ways hedge fund managers have been rebuilding this trust is by tapping asset servicing firms. Here is why it is worth the investment:
They ensure compliance to complex regulations. Through heightened regulation, authorities sought to prevent practices that would create bubbles, or promote unsustainable trading activity. The Dodd-Frank Act, cited as the most significant financial reform legislation, outlines policies for ensuring the liquidity of assets to easily distribute to the investors in the event of crisis. Not all hedge funds have the luxury of time to devote to complying with these often complex policies. But with asset servicing firms as an outsourcing partner, they can always assure their client investors that compliance is being taken care of by an expert independent party.
They allow the hedge fund managers to focus on strategic functions. Asset servicing firms take over the tedious day-to-day operations, especially the middle and back office functions such as transaction recording, trade and accounts reconciliation, tax reporting, preparation of financial statements, risk assessment, and accounting. And because they are not burdened by these tasks, hedge fund managers can then train their focus on core functions, such as client relations, making investment decisions, or crafting the firm’s overall business strategies. It makes for a good pitch to convey to prospective client investors: “We can accomplish big things because we have got the small things covered.” Furthermore, they have more time for communicating with clients.
They provide technologies for the precise completion of tasks. Through asset servicing, hedge funds can employ the latest innovations in accomplishing tasks. They can show these to the client investors, too. For instance, a Cloud-based portfolio management system may be made accessible for the investors to also monitor the performance of their funds. In an era where technology is key to being a step ahead of the competition, having access to cutting-edge tools will definitely impress clients and reassure them that the hedge fund manager is truly invested in its work.
Rebuilding trust in hedge funds may indeed take some time. But with asset services, the task is now easier to accomplish.
In : Business
