Building a managed account infrastructure | Hedgeweek (MAG News)
The change in the fund of hedge funds model to enable fiduciary powers to be reclaimed on behalf of the investor has spawned much new thinking and better practice, the application of which is being embodied in the wide range of infrastructure designs known as managed account platforms.
Demand was already growing from funds of hedge funds seeking to re-engineer their business practices to protect themselves from a repeat of the liquidity problems they faced in obtaining redemptions from underlying managers, before the eruption of the Bernie Madoff scandal in December 2008 focused increased attention on the advantages of managed account investment in reducing fraud risk.
MAG Consultancy was established in early 2009 to meet demand among allocators such as funds of hedge funds for a managed account infrastructure that would resolve a number of the key operational issues that had caused such angst, such as the inability to control valuation policy, cash policy and the inappropriate use of gating.
The firm’s partners and staff, who include John Godden of IGS and Simon Hookway of MSS, have between them been closely involved in the design, building and running of more than a dozen existing managed account platforms and have been able to bring the benefit of this experience to those looking for advice and assistance in deploying a managed account strategy.
A huge dynamic shift is in prospect. Whereas historically some 3 per cent of assets allocated to funds of hedge funds has been invested via managed accounts, this is rising exponentially and could increase over the next year to as much as half of all fund of funds assets. MAG Consultancy is dealing with a broad spectrum of allocators including fund of funds managers, administrators and banks as well as hedge fund managers seeking to offer their own managed account infrastructure.
Demand was already growing from funds of hedge funds seeking to re-engineer their business practices to protect themselves from a repeat of the liquidity problems they faced in obtaining redemptions from underlying managers, before the eruption of the Bernie Madoff scandal in December 2008 focused increased attention on the advantages of managed account investment in reducing fraud risk.
MAG Consultancy was established in early 2009 to meet demand among allocators such as funds of hedge funds for a managed account infrastructure that would resolve a number of the key operational issues that had caused such angst, such as the inability to control valuation policy, cash policy and the inappropriate use of gating.
The firm’s partners and staff, who include John Godden of IGS and Simon Hookway of MSS, have between them been closely involved in the design, building and running of more than a dozen existing managed account platforms and have been able to bring the benefit of this experience to those looking for advice and assistance in deploying a managed account strategy.
A huge dynamic shift is in prospect. Whereas historically some 3 per cent of assets allocated to funds of hedge funds has been invested via managed accounts, this is rising exponentially and could increase over the next year to as much as half of all fund of funds assets. MAG Consultancy is dealing with a broad spectrum of allocators including fund of funds managers, administrators and banks as well as hedge fund managers seeking to offer their own managed account infrastructure.