Operational scrutiny of hedge funds will continue to intensify this year due to demands from investors and regulators, according to Conifer Securities, a provider of business and operations solutions to hedge fund managers.
Conifer identified investors’ growing requests for separately managed accounts as one area in particular that will require those managers to have a more robust and complex back-office capability.
“Evolving investor and regulatory demands have made managing a hedge fund business a lot more complicated,” said Philip Stapleton, president and CEO of Conifer Securities. “As managers want to, and need to, spend their time managing assets, the outsourcing of non-investment functions will proliferate in 2007.”
Conifer also noted that demands for independent pricing and more transparency are forcing managers to use third-party administrators, a practice that has long been the standard in Europe and is now becoming the norm in the US.
“With more funds competing for assets from a much more discerning investor base, operational integrity is becoming just as important as performance,” added Jack McDonald, executive vice president.