During her opening remarks as chairperson of FTF News’ 3rd Annual Hedge Fund Operations and Technology Conference in New York, Holly Miller, partner at Stone House Consulting, discussed critical signs of maturity that hedge fund managers will need to demonstrate to regulators. Wall Street & Technology highlighted them in their May 2010 cover story. Please click here to download their free digital issue and look on page 9.
Debating Transparency and Valuation
Yesterday, theglasshammer.com hosted its second Women on the Buy-Side networking breakfast and panel discussion. Nicki Gilmour, founder and CEO of theglasshammer.com, began the event by explaining that the purpose of the gathering was to draw together top women in the investment management industry to discuss the topic of risk and its implications on performance for 2010.
Gilmour later explained that by getting top women together, we can continue to create a critical mass of female leaders in the industry and “change the perception of what a leader looks like.” For the women themselves, this was an event where “they are not the only woman in the room.”
Holly H. Miller, founding partner of Stone House Consulting, LLC, moderated the panel on the “massively broad topic called transparency,” today’s new “buzz word.” Panelists included Michelle McCarthy, Chief Risk Officer at Russell Investments, Virginia Volpe, CFA, Director of Hedge Funds, Global Transaction Services at Citi, Diane Garnick, Investment Strategist at Invesco, and Mara Topping, Partner, Investment Funds Group, D.C. Office of White & Case.
Read on at theglasshammer.com
Hedge Fund Transparency: The Long-Term Implications of Separate Account Management
Hedge fund managers and investors alike have embraced separate account management as a panacea to their operational risk concerns and a quick win in the quest for greater transparency. But they should think again. In their rush to solve one set of problems, investors may be introducing even greater risks to their portfolios and hedge fund managers may be setting the stage for significant business challenges over the long term.
The Long-Term Implications of Separate Account Management
Read the attached excerpt from the February 2010 edition of the CFA Institute’s Investment Performance Measurement Newsletter.
Critical Recordkeeping: Trade Tickets and Order Memoranda
It is remarkable the number of buy-side firms that have overlooked the importance of maintaining proper trade tickets and order memoranda in a timely fashion. Three weeks ago, the US Securities and Exchange Commission (SEC) charged New York-based Ark Asset Management Co., Inc. with fraudulent trade allocation as well as disclosure and books-and-records violations. This latter charge involved violations of Section 204 of the Advisers Act and Rule 204-2(a)(3) which requires registered investment advisers to make and keep true, accurate and current order memoranda for the purchase and sale of any security on behalf of a client.
Today many investment managers and hedge funds utilize electronic order management systems to track order creation, modification and deletion as well as trade execution details. These same systems typically will calculate order size, allocate block orders across multiple accounts and track trade execution details. Some more sophisticated systems will further perform pre- or post-trade compliance checks to ensure portfolios remain in compliance with client- or firm-imposed guidelines and restrictions, such as concentration limits or list restrictions (e.g., ‘no tobacco’).
Automated systems, however, can obfuscate for some just what is happening and the information required to ensure a firm remains in compliance with the recordkeeping requirement. Likewise, Rule 204-2(a)(3) is clear as mud for many. So we shall try to shed a little light on best practice for this aspect of maintaining books and records.
Continue reading “Critical Recordkeeping: Trade Tickets and Order Memoranda”
Hedge Fund Fees
Holly Miller, Partner at Stone House Consulting, is quoted by Hedge Funds Review.
Survey of Buy-Side Industry Trends
Margins in the investment management industry are under siege, facing threats from both directions – lower fees and rising costs. The Glass Hammer / Stone House Consulting Survey of Buy-Side Industry Trends indicates that while regulators are contributing to the cost pressures, the industry’s own client base, together with the investment consulting firms that advise those clients, are a key factor in the equation. Not only are investors demanding greater due diligence, improved risk monitoring and controls, but they are calling for lower fees without any concession on the performance expectations, high levels of customization and quality client service they have always required.
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Leaders of the Pack
Video of The Glass Hammer Network’s breakfast networking event on Sep 29 in New York City.
Hosted by Nicki Gilmour, CEO, theglasshammer.com. Panelists include Cynthia Steer, Head of Research Strategy, Rogerscasey; Marianne Brown, CEO, Omgeo; Liz Philipp, Head of the New York Office, PIMCO; and Annie Morris, Head of North America, Linedata Services. Moderated by Holly H. Miller, Partner, Stone House Consulting.
Where Does Performance Fit?
CFA Institute free podcast from the 2009 Annual GIPS Conference on Sep 23 in Boston.
Panelists include Stephen Campisi, CFA, institutional portfolio manager and principal, Intuitive Performance Solutions; James Edmonds, CFA, global head of performance measurement and client reporting, AllianceBernstein; and Holly Miller, partner, Stone House Consulting. Moderated by Beth Kaiser, CFA, CIPM, director of investment performance standards, CFA Institute.
Managing the Business of Asset Management
In the wake of plummeting revenue streams, particularly with client concerns over operational risk and managers’ needs to control costs, the lines between traditional investment managers and hedge funds have blurred and will continue to do so. Traditional investment managers and hedge funds alike need to focus on the business of managing money as well as the management of the assets. Though the industry’s historically high margins have allowed managers to pay scant attention to the decidedly unglamorous and hugely complex expense side of the business, they must do so now. The winners will be those who manage their firms as well as they manage their clients’ portfolios.
While buy-side revenues are driven by assets under management, costs and, ultimately, profit are driven primarily by the number of accounts and secondarily by the number of products or strategies the firm offers. Even with automation, more…
Read on at The Glass Hammer.
Forgotten Risk: Free Delivery of Securities
While most operational due diligence reviews focus significant attention on the procedures involving wire transfers, they often overlook those surrounding the free delivery of securities. Yet both activities involve the transfer of assets out of a fund or portfolio with nothing received in exchange.
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