Other Voices: 5 Benefits of a Mobile Fund Manager
Earlier today, Opalesque covered our 'Benefits of a Mobile Fund Manager', distilling our seven benefits into five salient points. On the heels of launching LiquidMobileSM, our real-time portfolio and risk analytics app for fund managers, we included client scenarios in this feature from those that participated in its beta-testing phase.
Alternative Market Briefing 04.Feb 2015
The digital revolution is transforming today’s fund manager. The days of being tied down to your desk to manage investments and handle investor inquiries are disappearing. In its place is a new mobile, connected, empowered fund manager that can carry the most important aspects of their business in the palm of their hands.Through mobile devices, you can be more connected — to your investment team, counterparties, and potential and existing investors. Dynamic hedge funds are leveraging this connectivity to create a more nimble, proactive and ultra-effective business.
Here’s how a mobile-manager can be smarter than their deskbound competition.
#1 Raise more assets
Let’s start with the most important advantage of a mobile hedge fund manager: the ability to dedicate more time to raising assets and less time on administrative functions. Winning allocations from institutional investors comes down to having access to the information that matters most to your potential investors. That’s where a hedge fund operating system comes into play—having the fund’s historical and real-time information readily available demonstrates you have the controls in place to manage larger, more complex allocations. Fund management professionals are now able to access things that just a few years ago they would be hard-pressed to assemble in a week using archaic, static PDF reports. Full performance reports, complex due diligence questions, can be done in real-time and by different people.This efficiency frees you to spend more time proactively discussing the information that matters—methodology, performance, and track record.
#2 Outclass your peers
In a recent study, over 87 of 100 hedge fund managers indicated they were using the cloud in some shape or form today. With the right cloud-capabilities, fund managers would have a competitive edge over their peers due to the speed at which they could actively track investments while responding to investor needs, all from a mobile device. By making the fund’s profile available on a mobile device, including performance, Shadow NAV and risk statistics, an operating system can help you quickly respond to investor inquiries, provide these same clients with an investor-portal for immediate access to more detailed information about their investments, and allow you to present an actionable pitch book from an iPad, backed by profound data.________________________________________________________________________________________
Consider this example from a long/short portfolio manager:
I took a call from a potential investor who could catapult the fund into the top endowments. It was an assessment on whether we had the capacity to take on new money — it was as much about performance and pedigree as it was about having the scalability and infrastructure to support stiffer transparency demands that come with eclipsing the $100 million-dollar AUM threshold. The investor was also worried that their contribution might decrease my ability to execute the strategy if my operations were supported by patch-work controls that kept me off the desk… and as a result they wouldn’t realize the performance that prompted the initial call.
After walking through my methodology, I granted said investor access to an app that my current investors access for 'personalized transparency’—the ability to drill-in and interrogate my performance, daily P&L, market and liquidity risk, and NAV-light stats. And when I deem necessary, they could see how my top holdings or exposure to a specific industry, sector or name affects their investments in real-time.
I was able to demonstrate institutional controls are in place to manage larger investments without having to source through static data and reports. The best part of the discussion is I used my iPad to walk through our business.
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I took a call from a potential investor who could catapult the fund into the top endowments. It was an assessment on whether we had the capacity to take on new money — it was as much about performance and pedigree as it was about having the scalability and infrastructure to support stiffer transparency demands that come with eclipsing the $100 million-dollar AUM threshold. The investor was also worried that their contribution might decrease my ability to execute the strategy if my operations were supported by patch-work controls that kept me off the desk… and as a result they wouldn’t realize the performance that prompted the initial call.
After walking through my methodology, I granted said investor access to an app that my current investors access for 'personalized transparency’—the ability to drill-in and interrogate my performance, daily P&L, market and liquidity risk, and NAV-light stats. And when I deem necessary, they could see how my top holdings or exposure to a specific industry, sector or name affects their investments in real-time.
I was able to demonstrate institutional controls are in place to manage larger investments without having to source through static data and reports. The best part of the discussion is I used my iPad to walk through our business.
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#3 Personalize transparency
Hedge fund managers refusing to provide transparency is the single greatest reason for an investor veto, according to Deutsche Bank’s Global Prime Finance group’s third annual Operational Due Diligence Survey. The amount of data investors require to assess whether to allocate to a fund has grown tremendously in the past few years. A fund is no longer based solely on performance and pedigree— the collection of performance and risk statistics are now weighted with and against the modern tools and services you have in place to actively manage the business.Personalized transparency is all about meeting the transparency and reporting requirements for each client. Having access to your data does little good if you cannot customize the results on the fly to get to the information your investor wants to see. You need real-time, present-day views of your performance and risk statistics – all distilled into cohesive views so investors can glean the information front and center.
#4 Institutionalize
All too often, the daily tasks and responsibilities of a fund manager are spread out over a wide range of tasks, many of which require time away from investing. This can make your daily workflow, especially if you are at a start-up/emerging fund, a headache.________________________________________________________________________________________
Consider this scenario from the founder and PM of a healthcare fund that launched 18 months ago:
18 months ago I launched the fund with $50 million in assets, two prime brokers, several executing brokers and zero separately managed accounts (SMA's). Fast forward to today, assets have doubled, the primes remain intact and I’ve relinquished all trading to a newly-hired Head of Trading. My conversations with investors have shifted from performance to the infrastructure I’ve invested in to support operations. I’m finding larger investors are not willing to co-mingle their funds with my other clients.
In this instance and moving forward, my head of trading requires modern technology with agnostic workflows to allocate positions across our clients in a compliant manner… that does not sacrifice best-execution due to time spent manually tying-out positions.
Compliance is another key requirement – our strategy and investment policy are now well-defined, so there’s only so much room for my head of trading to augment strategy with arbitrage opportunities. His long-term success comes from best execution, all within the boundaries of our strategy and policy, while avoiding the 'noise' that can come from brokers and other outlets. This is where sub-millisecond pre-trade controls built into an agnostic front-end not only identify, and where needed, nullify out-of-bounds transactions, but help me foster better relationships with my clients by eliminating hidden surprises when it comes to putting client money to work.
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18 months ago I launched the fund with $50 million in assets, two prime brokers, several executing brokers and zero separately managed accounts (SMA's). Fast forward to today, assets have doubled, the primes remain intact and I’ve relinquished all trading to a newly-hired Head of Trading. My conversations with investors have shifted from performance to the infrastructure I’ve invested in to support operations. I’m finding larger investors are not willing to co-mingle their funds with my other clients.
In this instance and moving forward, my head of trading requires modern technology with agnostic workflows to allocate positions across our clients in a compliant manner… that does not sacrifice best-execution due to time spent manually tying-out positions.
Compliance is another key requirement – our strategy and investment policy are now well-defined, so there’s only so much room for my head of trading to augment strategy with arbitrage opportunities. His long-term success comes from best execution, all within the boundaries of our strategy and policy, while avoiding the 'noise' that can come from brokers and other outlets. This is where sub-millisecond pre-trade controls built into an agnostic front-end not only identify, and where needed, nullify out-of-bounds transactions, but help me foster better relationships with my clients by eliminating hidden surprises when it comes to putting client money to work.
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#5 Focus on the Greeks– especially Alpha
The flexibility of a hedge fund operating system also allows you to support your specific investment and client relations processes. Here’s an example about how it can help generate that most important of the Greeks. Finally, let’s share another example. This comes from a partner and founder of a US-based even-driven fund.
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"We received a call from a managed account client, who had their money invested across several funds. He asked why we were up .1x, while the other fund manager was down .3x," he told me recently. Because he had a mobile solution, he was able to swipe his iPad and respond in seconds, even though he was out of the office. No more spending manpower and time to build spreadsheets. "The response from the client was, 'If we send you a couple million now, can you get it to work by 4 o'clock?’
For this manager and many others, mobile is the ability to answer investors’ questions when it matters.
"We find it liberating to have the tools to actively manage our investments, wherever we are, with profound data to back up and support allocation decisions. And my clients have the same luxury," he said.
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We have seen consultants and experts discuss the need for client-specific flexibility when it comes to reporting and compliance. We believe that we’ve now crossed the threshold where we can stop talking about these technologies as something that will come together in the future, but more of a realistic option for hedge fund managers in the present.
Learn more about LiquidMobile today>> http://liquidholdings.com/solutions/liquid-mobile. And, to to take our mobile solutions for a test drive, click here: http://liquidholdings.com/demo
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