Concerned that public pensions, university endowments, hospitals, museums, school boards and other nonâprofits and taxâexempt organizations are at the mercy of thirdparty advisors when it comes to managing their alternative portfolios, Simplify LLC today announced
that it will offer its flagship portfolio management and risk system PortfolioCentriX™ (“PCX”) proâbono to the taxâexempt sector.
The alternative fund market is a now standard part of any institutional investor’s portfolio, and it’s here to stay. A potential problem arises, however, when sourcing, researching, and conducting due diligence to identify optimal managers for inclusion in a portfolio. This can be a daunting task for most taxâexempt institutions with finite resources.
“Alternative fund allocations proved their worth during the credit crisis, demonstrating downside protection in addition to their typical attractive, riskâadjusted returns and diversification benefits. It is no surprise institutional investors are increasing their allocations, but it is generally understood that there are many risks and costs, both explicit and implicit, associated with investing in hedge and private equity
funds,” said Brian Shapiro, president of Simplify LLC.
The myriad challenges associated with executing an alternative investment program have prompted many institutional investors to employ investment consultants, fund of fund managers (acting in either a discretionary or advisory capacity) or specialist advisors to assist with the implementation and maintenance of this portion of their portfolios.
“We’ve introduced PortfolioCentriX™ to the market in order to help level the playing field for alternative fund participants by providing investors with the tools and expertise they need without any conflicts of interest,” Mr. Shapiro said. “Investing in fund managers has always been a practice of knowledge arbitrage. PortfolioCentriX™ is an enabling technology that allows users to better understand, pour over
and monitor their new and legacy hedge fund, fund of and private equity holdings”, added Shapiro.
“We just want to help nonâprofits that find themselves in situations where they feel too beholden to third parties,” Tarryn Valle, Head of Product Development said. She added “Institutional investors have become increasingly aware of operational risks, and as such are facing a greater requirement to collect and monitor more information about the funds they invest in. They are under pressure to dedicate more resources to operational due diligence and to increase the scope, depth and frequency of reviews.”
In recent years, hedge fund failures have cost investors billions of dollars, and the industry has experienced a steady stream of other losses attributed to Ponzi schemes, theft, deliberate misâpricing and other operational failures. “PortfolioCentriX™ will provide the taxâexempt community all the technical ability to collect, collate, analyze and report on all the data they can obtain. “The PortfolioCentriX™ workflow is intuitive and easy to use, which should help these smaller investment groups handle the workflow without additional demand” Ms. Valle added.