Prime Brokerage + Administration

Prime Brokerage & Hedge Fund Administration

More prime brokerage firms are adding on administration services to help attract and retain clients. I wasn’t sure how widespread of a trend this was but saw this mentioned within an article yesterday as noted below.
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In recent years, the custodian banks that have acquired hedge fund administrators have sought to adjust client lists in favor of larger and more profitable hedge fund and fund of funds groups interested in a broader array of services. At the same time, prime brokers have recognized that providing administration services can help attract and retain clients and counter the shift among hedge fund managers towards multiple prime brokerage.

“It would be surprising if the hedge fund administration industry continues to support such a large number of providers, and there is now evidence that a renewed round of consolidation is in the offing,” says Dominic Hobson. “However, the appetite to sell may be offset as well as encouraged by the depressed prices available. In any event, the buyers are likely to be different from the banks which dominated the acquisition process in the early years of this century.” Read more…

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Hedge Fund Due Diligence Resource

Last month someone sent me this resource on due diligence. Fortis offers this guide to investment due diligence which goes beyond the initial selection process. The article focuses primarily on identifying potential problems by maintaining contact with hedge fund managers and thoroughly looking into the operations.

Although much can be learned from traditional due diligence, Fortis suggests simply talking with the staff and manager. They suggest that a practical understanding of psychology helps detect the underlying factors that could effect a manager’s performance. This article advocates a close relationship with the manager, adding a level of transparency for the investor and includes helpful tips for building this relationship.

Here is the full resource: Fortis Due Diligence Article

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Tags: Hedge Fund Due Diligence, Hedge Funds Due Diligence, Due Diligence on Hedge Fund Managers, Investment Manager Due Diligence, Investors due diligence, investor due diligence