A Fund Manager's View on Working Closer with Investors

Friday, February 27, 2015

"Strong performance alone is no longer enough to guarantee a good relationship with investors if they feel they are being treated poorly. Being more open and accessible to investors may even help managers when their funds are going through a rough patch."

- Institutional Investor's Alpha

In the wake of higher than expected redemptions in December 2014 and scandals that continue to play themselves out on the front page of the journal and on social media outlets, we’ve published ‘performance and risk analytics dashboards and reports’ from LiquidMobile^SM that our hedge fund clients are using to forge closer relationships with their investors— relationships built on integrity, trust and control. Our services-team continuously works hand-in-hand with CIO’s, heads of portfolio management and heads of investor relations to build custom views that monitor key metrics in real-time, all the time, and to communicate how the investment team would react during foreseen and unforeseen market conditions.

Portfolio Snapshot

The founder and head of trading at a $100M new launch relies on this dashboard to actively monitor the performance of each separately managed account over specified time horizons. Statistics such as NAV, Total P&L and Net/Long/Short Exposure detail how the holdings within the portfolio are contributing to performance. The data can be sliced-and-diced and the view can be changed from 'historical' to 'as-of' to understand the impact orders being worked in the market have on each account as executions are confirmed in Liquid's order and execution management system. This is one of two dashboards the head of trading keeps open throughout the day to understand changes in each account.

Fund Performance

The head of investor relations at a $700 million activist fund relies on this dashboard to illustrate the fund's performance compared to specific benchmarks including the HFRI Hedge Fund and HFRI Macro indexes. The dashboard highlights the drivers of performance overtime and provides key statistics such as Absolute/Average Monthly Return, Max Drawdown, Average Drawdown and Sharpe/Sortino Ratios. Graphical representations of Risk vs Return and the Distribution of Returns provide investors with more clarity on the capital-at-risk to generate the performance. The dashboard drills further into the results with Benchmark Analysis that compares Month/Quarter/Year-To-Date Returns, Standard Deviation and Greeks. LiquidMobile^SM provides the head of investor relations with the ability to customize the time horizons, benchmarks and statistics to suit each investor’s reporting requirements.

Liquidity Analysis

With investor redemptions at an all-time high since April 2009, the head of portfolio management at an $800 million-dollar fund relies on this dashboard to discuss liquidating a seperately managed account with his investor. The dashboard illustrates the impact liquidating the account would have on its Gross/Net/Long /Short Market Value, and the percentage of the fund that would liquidate immediately compared to the percentage that would liquidate over longer time horizons (6 to 10 days; over 10 days). Drilling into the results allows the portfolio manager to discuss the specific holdings in the portfolio that would have the largest positive and negative impact on the portfolio’s value. This type of analysis allows the head of portfolio management to inform his investor on the optimal time horizon(s) to liquidate assets if and when requested.

Next week we will highlight a series of dashboards and reports used by an emerging manager that has yet to launch and is using LiquidMobile^SM as a capital-raising tool. If you are looking to institutionalize the business and use more informed analytics and data to drive investment decisions and client discussions, contact us today to get a demonstration of LiquidMobile^SM.

About LiquidMobile^SM
LiquidMobile^SM is a web-based app that allows hedge funds and other asset managers to monitor portfolio and risk analysis and reporting across multiple portfolios on a mobile device in real-time, all the time, everywhere. The app is engineered for fluidity from the desktop to any mobile device, giving fund managers the ability to easily interact with historical, real-time, and forward-looking P&L, performance, market and liquidity risk, and NAV-light calculations. With mobile-optimized dashboards and reports to monitor investments and investor relationships on the go, LiquidMobileSM represents a major step forward for the hedge fund industry, which today faces rising pressures across transparency, regulations and operating costs.