As allocator scrutiny intensifies, hedge funds turn to managed services to meet rising demands for transparency, resilience and control.
Operational infrastructure has never been more important for emerging and established hedge funds.
That was a key takeaway from a recent Hedgeweek Report, The New Rulebook: How Operational Infrastructure is Becoming Hedge Funds’ Make or Break Investment.
This research, which gathered survey data from hedge fund allocators, experts and managers, found that as allocators’ requirements have become more stringent, the absence of institutional-grade infrastructure has evolved from a concern to a disqualifier in many allocation decisions.
Driven by heightened regulatory oversight and allocators’ demand for transparency, operational strength has clearly become a make-or-break factor.
These increased requirements put hedge fund managers under pressure: Emerging funds must balance institutional standards with cost constraints, while established managers wrestle with modernizing legacy systems.
Increasingly, managed services—which were once seen as a hindrance to achieving these goals—are now helping start-up and emerging hedge funds keep pace with these expectations.
In this post, we examine the Hedgeweek research and explore the qualities a managed services provider needs to have to help funds secure scalable, future-ready operations.
The Rising Bar for Hedge Fund Operations
Today, institutional-grade infrastructure is table stakes. Winning allocator trust and scaling a fund requires hedge fund managers to make their operations a true priority.
The Hedgeweek research indicates that 56 percent of allocators consider institutional-grade infrastructure a baseline expectation, and over 73 percent view the absence of an independent administrator—a key component of institutional-grade operations—as an “immediate disqualifier.”
This heightened scrutiny extends beyond general processes to specific operational capabilities.
In North America, 82 percent of allocators have increased their operational due diligence (ODD) reviews over the past two to three years. In Europe, 40 percent of allocators report “increased rigor,” while 60 percent report “unchanged standards.”
As regulatory pressures and the need for oversight of complex investment strategies grow, nearly 90 percent of North American allocators responding to the survey consider shadow books of records essential or very important. In Europe, the percentage is the same—90 percent of allocators rate shadow books as essential or very important.
For hedge funds, meeting these rising expectations requires not just internal resources but strategic partnerships.
This is where managed services come into play.
Contrary to a common misconception, managed services don’t reduce oversight — they enhance it. The right provider delivers standardized processes, real-time reporting and clear governance, giving managers full visibility and control while freeing their team to focus on strategic priorities.
A strong provider should offer the option to augment the fund’s in-house team with managed services. Co-sourcing functions like reconciliation, data onboarding or post-trade processing enable managers to scale up operations without over-hiring or overstretching their staff.
For startups, these services provide critical support without the cost of building a full operations team. For emerging managers, they help maintain institutional-quality operational execution and oversight as the business scales.
3 Managed Services Characteristics to Meet Allocator Expectations and Fuel Hedge Fund Growth
Once considered a convenience, managed services have become a critical pillar of hedge fund infrastructure. The right provider doesn’t just streamline operations—they strengthen controls, increase transparency and deliver the resilience allocators now expect in rigorous operational due diligence reviews.
But not all managed services providers are equal.
According to The Hedgeweek Report, “institutional grade” no longer refers exclusively to large, traditional providers. Allocators increasingly recognize that specialized providers can meet the same high standards—often with greater flexibility and more competitive pricing.
But to ensure they can meet allocator demands and build a scalable foundation for long-term growth, hedge funds must carefully evaluate their partners.
Here are the top qualities to look for in a managed services partner:
Integrated Technology and Expertise
Emerging and established hedge funds alike face mounting operational challenges as a result of heightened allocator due diligence, demand for greater transparency and the need to keep pace with evolving regulatory and settlement standards.
Meeting these expectations is difficult when technology and services are treated as separate solutions.
A holistic approach—one that integrates robust software with expert services—helps funds streamline operations, strengthen controls and adapt quickly to change.
By working with a provider that combines institutional-grade technology and experienced service teams, managers gain the operational resilience allocators expect today and a scalable foundation for future growth.
Future-Ready Technology and Services
Meeting allocator expectations at launch is only the first step. Allocators expect to see operational maturity not just today, but as your assets and strategies evolve.
To sustain credibility and position your fund for long-term success, you need a trusted partner who can grow with you.
The right managed services provider should deliver scalable capabilities that expand in step with your fund—whether that means supporting new asset classes, handling increased trading volume or strengthening reporting and compliance functions.
Look for a partner that offers comprehensive and personalized services that cover onboarding, implementation and the ongoing support of front-, middle- and back-office operations.
Operational Experts Who Know Your Business
To satisfy allocator demands, service teams must bring subject matter expertise that goes beyond system knowledge. These teams need to understand how your fund operates and the regulatory and strategic pressures you face.
This combination of technical know-how and deep industry experience ensures your fund has the guidance to strengthen operations, reduce risk and adapt to changing allocator expectations.
By working with a provider whose team understands both your technology and your business, you gain a partner capable of meeting today’s challenges and preparing your fund for what’s ahead.
Eze Eclipse and Managed Services: Operational Strength and Technology Designed for Today’s Hedge Funds
In today’s hedge fund landscape, operational strength is no longer optional; it’s a critical factor in earning allocator trust and positioning your fund for long-term growth.
By combining Eclipse with managed services, hedge funds gain more than technology and support—they gain a resilient operational foundation designed to scale.
This integrated approach delivers institutional-grade infrastructure, expert service teams with years of experience and the agility to adapt to evolving market demands, empowering managers to focus on performance while building for long-term success.
Learn More
To learn more about the Hedgeweek research findings, download your copy of the research.
And watch our recent webinar to hear me and other industry experts discuss how a hedge fund’s operational infrastructure plays a pivotal role in its overall success.
For more information on the value Eclipse and managed services bring to your hedge fund, visit our website or contact us.
