Operational scrutiny of hedge funds will continue to intensify this year due to demands from investors and regulators, leading to increased outsourcing, according to Conifer Securities, a provider of business and operations support to hedge fund managers, family offices, foundations and endowments.
Conifer identified investors' growing desire for separately managed accounts as one area in particular that will require managers to have a more robust and complex back office capability.
"Evolving investor and regulatory demands have made managing a hedge fund business a lot more complicated," said Philip Stapleton, president and CEO of Conifer. "As managers want to, and need to, spend their time managing assets, the outsourcing of non-investment functions will proliferate in 2007."
Conifer also noted that demands for independent pricing and more transparency are forcing managers to use third-party administrators, a practice that has long been the standard in Europe and is now becoming the norm in the U.S.
"With more funds competing for assets from a much more discerning investor base, operational integrity is becoming just as important as performance," added Jack McDonald, Conifer executive vice president.
Conifer is headquartered in San Francisco with offices in New York, Boston and the British Virgin Islands.