We've noted that the financial crisis (recession [1] news) seemed to spur automation and the rise of third-party administration in the hedge fund industry (hedge fund [2] news). A recent study by Greenwich Associates for Omgeo has found that more than two-thirds of the hedge funds responding to their survey believe "that operational improvements and automation have a direct and positive impact on their ability to attract investors and assets," according to Wall Street & Technology.
About 40 percent have moved to improve reporting and increase transparency for investors, and about one-third have started to obtain more independent valuations and accounting. In a sense, the goal of all of this is enhanced transparency and greater customer confidence in their funds' operations. It's basically a retention issue these days. You would have to think the most successful funds are the ones that have moved most aggressively down these tracks. For smaller funds, there are some lessons here. If you want to play with the big boys, you need to do all of this as well.
For more:
- here's the Wall Street & Technology article [3]
Related Articles:
Hedge funds outperformed over past decade [4]
Return of the hedge fund vigilantes? [5]
Rabbi tries to shake down hedge fund [6]
Is Goldman Sachs a hedge fund? [7]