Matrix-ims is ready for retail funds of hedge funds

18 July 2007

Matrix-ims, the comprehensive Fund of Fund software package, is ready to support the launch of retail funds of hedge funds in Britain.

Several firms are set to offer open-ended funds of hedge funds for retail distribution, following the Financial Services Authority's (FSA) publication of consultation paper 07/06 in March 2007, titled "Funds of Alternative Investment Funds (FAIFs)" and AIMA's subsequent response in June 2007, agreeing that the FSA is correct to place it's emphasis on the issue of due diligence.

Commenting on how matrix-ims enhances due diligence work by FAIF investment teams, Ian Beaumont, Managing Director of matrix-ims explains, "With easy to use functionality to analyse, share, and store due diligence information, as well as an audit trail, users of matrix-ims can demonstrate to their investors the care they take in constructing and monitoring their portfolio".

The paper recommends that FAIFs must be accurately priced according to net asset value and should ensure that they are able to meet foreseeable redemption requests from its investors.

Ian continues, "Maintaining the highest possible accuracy on prices for all the underlying investments involves maintaining multiple time series from different data vendors, as well as weekly NAV estimates from the managers. matrix-ims automates a process that would otherwise be time consuming and open to human error. For example by harvesting the weekly estimates from investor relations reports and emails sent to the FAIF."

"Monitoring liquidity as subscriptions come into the FAIF and investments are made, is a prime concern to a portfolio manager. matrix-ims stores the redemption rules for all underlying investments and displays how ‘what if' trades would break mandate rules such as minimum liquidity, by simply clicking on "Compare to Mandate" function.

The introduction of retail FAIFs will bring the UK in line with other jurisdictions (notably France, Germany, Spain, Italy and Ireland), all of which have already introduced retail funds of hedge funds. So it seems there is a general international acceptance that advances in investment management techniques made possible by technology like matrix-ims, make such funds appropriate for the retail environment.

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