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Launching a new hedge fund in lockdown: can it be done?

As the COVID lockdown drags on in many countries, some fund managers have got tired of waiting. Preqin data indicates that more funds are being liquidated than launched, as many prospective funds take a wait and see approach. We are aware of funds continuing to move forwards with launching new funds and strategies. With strong partners, a successful launch is still achievable in the current circumstances, but you will need to make sure that some of the new obstacles COVID has created are addressed.

Some of the key operational challenges facing hedge funds include running a business in an environment where lockdowns are frequent and unavoidable. Managing remote teams can be difficult in any business, but hedge funds must be certain they have the systems and processes in place that can help teams to function and report uninterrupted.

Critical issues include how to build and manage internal controls and documentary procedures and maintain the levels of transparency your investors are going to require.

It is important to understand the perspective of investors. They are finding it tough to run due diligence during the current environment; it is hard if not impossible to visit fund managers in their offices, for example. Life is even more challenging when it comes to evaluating the infrastructure of a fund manager.

What can you do about it?

So, you are planning the launch of a hedge fund in the near future. You have decided against waiting any longer. You may already be in advanced discussions with seed investors, but you are encountering stumbling blocks around your operational infrastructure. How can you convince investors that your fund can run professionally, even as we face the prospect of further disruption from the pandemic in 2021?

One option is to use a partner like Truss Edge to help you verify that you have sound, tested and independently certified technology in place to support your portfolio management and reporting operations. Independently verified systems and back up teams can go a long way to reassuring early stage investors.

We can deliver the appropriate integration and efficient STP to all counterparties, including prime brokers, data services, your fund’s OMS and any external EMS. We also work closely with counterparty brokers, administrators and any fund regulatory platforms your firm may be leveraging.

Ultimately, we can deliver a fully integrated platform that takes care of a wide range of day to day portfolio management and order management activities, risk management functions, cash management, reconciliation and accounting systems. The technology comes with high quality SaaS, backed up by a native browser support and active cyber controls.

Peace of mind for investors and COOs

Using a platform like this one brings peace of mind: COOs can rely on our staff to help to manage any gaps in coverage, e.g. through illness or holiday absences.

Our services are independently attested, via rigorous SOC1 compliance audit, and fully supported with institutional level BCP and DR procedures. Our own teams work in multiple locations on two continents and can support funds on a 24-hour basis.

Hedge funds that are faced with the prospect of running their operations remotely and that are having to try to address searching ODD queries can draw on the established Truss Edge technology suite to provide investors with greater reassurance that day to day operations are being supported by cutting edge technology, coupled with a highly seasoned team of fund operations professionals. From the perspective of investors who cannot travel or kick the tyres of funds in person, evidence of a tried and tested technology partner as part of your operations suite will go a long way to helping them sleep better at night.

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