“The new, more powerful HIP 2.0 provides the control, data accuracy, timeliness, reporting and transparency that institutions are demanding before they invest in a fund of hedge fund,” said Richard Koppel, Managing Director of youDevise, who advises FoHFs on how to reduce information risk.
FoHFs increasingly are targeting institutions, which are replacing high net worth individuals as the lead source for new assets under management. A recent study reports that institutional money will grow to nearly 25% of all hedge fund AUM, from 15% today, with half of that increase going to FoHFs over the next five years.
HIP 2.0 features new front office management decision support, expanded middle office operating capabilities, and enhanced usability. The “Portfolio Manager Dashboard” provides FoHF managers with a veritable command center, using tables and graphs to monitor real time performance, liquidity and cash, and to analyze positions, investment styles, and allocation strategies.
“HIP 2.0 makes it easier for managers to find the information they need, make decisions faster and take advantage of market opportunities,” Mr. Koppel said. “In addition, HIP 2.0 is easy to install. No customization is necessary. We can input all the historical data. Clients can be up and running in weeks.”
Solving The FoHF Information Challenge
The unique and complicated information requirements of FoHFs present a major challenge in attracting institutions. FoHFs need to track performance at the fund level and for investor share classes that have intricate structures, complex fee arrangements, and various currency denominations. Hedge fund subscriptions also involve different lockup terms, fee and settlement schedules, notice periods, and gating.
“As a relatively new industry, most FoHFs manage their positions using linked Excel spreadsheets programmed by one or two people in-house,” Mr. Koppel explained. “Few calculations are tested. There is no audit trail. Data is entered manually, multiple times. The only point at which a FoHF has a clear view of a portfolio is two to three weeks after month’s end, when it receives net asset value statements from its administrator.”
To solve many of these problems, youDevise launched HIP 1.0 in May 2006 as the first online portfolio management system for FoHFs. Currently, five clients based in the U.K. and Europe are using HIP to manage a combined AUM of more than USD $8 billion. To further the “HIP Revolution,” youDevise developed an even more powerful next generation release.
HIP 2.0 Highlights
1. Front office management executive support
• Portfolio Manager Dashboard. This new page cuts to the heart of performance without the need to wade through reports. Users can click on any of the graphics or tables to drill down to underlying detail.
• New Performance Page. Provides detailed historical NAV data over any period of time, with or without benchmarking. As with all HIP performance data, this includes mid-month estimated reporting, critical for FoHFs, which typically receive monthly NAVs two to three weeks after month end.
• Enhanced Liquidity Page. Managers can measure available liquidity on any date or series of dates. Managers also can model a FoHF’s liquidity profile with or without settlements.
2. Expanded middle office operating capabilities
• Supports different share classes and series within the same FoHF, and the ability to report on their performance.
• Reports on the investor account level, so the FoHF can determine precisely the performance each investor is experiencing.
• Allows for internal trades, so one FoHF can invest in another, enabling managers to use the HIP to create a top level fund, with FoHFs underneath it.
• Facilitates the statistical analysis of asset return histories and fund allocations.
3. Improved usability
• Enhanced Look & Feel. HIP 2.0 features new colors, more graphics and other design adjustments to improve readability and presentation of data.
• Even Faster Response Times. New technology pre-calculates data in order to display results and graphics faster than ever.
• Expanded Browser Support. Compatibility with the increasingly popular Firefox browser as well as with commonly used versions of Internet Explorer.