An Infovest 21 survey on the fund of hedge funds industry “found that over the past year, funds of funds’ most frequent change, as cited by 41% of those surveyed, was adding more nimble managers to their underlying portfolios. Another 38% said they became more liquid/provided more liquidity.”
Times they are a-changin’ (channeling Bob Dylan) for fund of hedge funds as they look to add value to investors and differentiate their funds from the competition. This evolution also adds new levels of complexity, particularly as fund of funds move towards investments in small-to-medium sized hedge fund managers. Investments in smaller hedge fund managers offer the prospect of higher returns and portfolio differentiation, but in some cases also require more due diligence and monitoring.
New fund of fund portfolio management software tools are emerging to provide a unified view of portfolio holdings and allow for smarter decision making. One such product is from Ledgex Systems.
Today Ledgex Systems, a subsidiary of Eze Castle Integration (full disclosure!), introduced a new component of its core fund of hedge fund portfolio management platform. The new module, Ledgex Workbench, allows fund of hedge fund managers to more effectively conduct ‘what-if’ analysis based on their whole, or subset if desired, portfolio.
Ledgex Workbench takes what is typically a manual, labor-intensive process and replaces it with automation so managers can more efficiently and effectively analyze future capital allocation plans. This new module adds on to the existing Ledgex platform that includes:
Ledgex Manager for advanced analytics, administration and decision support
Ledgex Monitor for monitoring and tracking firm-defined fund attributes
Ledgex Investor Relationship Management (IRM) for managing quantitative and qualitative data for a firm’s investors and hedge fund or private equity interests
Ledgex Alerts, which enables individuals or groups at a firm to monitor internal and external activity, content, business data and relevant industry information
Read more about Ledgex Workbench here.
Looking ahead you can expect that the fund of hedge fund software market will continue to evolve and play a larger role in fund differentiation, particularly as funds seek to “reinvent” themselves and deliver outsized returns to investors.