WHAT: The headlines tell you a trend is spreading among institutional asset managers as the industry witnesses their increased investment in hedge funds. Some of the biggest pension plans, including Eastman Kodak and Amoco, had been investing successfully in hedge funds for some time, and CalPERS, the biggest public fund, has made commitments to put $11 billion into hedge funds. With this inflow of significant amounts of capital from savvy investors, hedge funds need to be watertight in their operations now more than ever before.
WHY: Institutional investors are leveraging hedge fund strategies to maximize their portfolios’ performance while minimizing risk. In contrast to the goals of private investors looking to squeeze the highest returns out of their investments, low correlation is a more important factor for institutions. And with big bond portfolios, they look for hedge strategies that have a risk profile closest to fixed-income: returns of 10-15% and low volatility.
INSIGHT: Advent's Peter Hess, Senior Vice President and General Manager of Advent’s Global Accounts Business, says, "Hedge funds see institutional investors as key to their growth and success. They will require the help of their service and technology providers to satisfy demands from their institutional clients for both investment and operational risk management.
Additionally, traditional long-only institutional asset managers recognize the importance of offering competitive hedge fund product to grow their businesses. Introducing hedge fund product requires that even firms with mature technology and operations modify and enhance their operational processes and technical infrastructure.
The challenges faced by hedge funds and traditional institutional asset managers in preparing for institutional hedge fund investment represent strong growth opportunities for the firms who adapt most effectively, both in terms of providing solid investment performance, as well as establishing infrastructure and processes to minimize operational risk.”
WHO: Advent spokespeople are available for a detailed discussion on the key drivers of the trend, what this now means for asset managers and the hedge funds in which they invest, and how institutional asset managers and hedge funds are coping with the demands for watertight operations.
**Interviews will be scheduled with the appropriate subject matter experts upon request. **
ABOUT: Advent Software, Inc. (www.advent.com), a multi-national company, has been providing trusted solutions to the world's leading financial professionals since 1983. Firms in 50 countries using Advent technology manage investments totaling more than US $8 trillion. Advent's quality software, data and services enable financial professionals to improve service and communication to their clients, allowing them to grow their business while controlling costs.
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