Fri, 13/07/2007 - 06:53
As hedge funds amass more assets, thanks to a surge in institutional inflows, demand for sophisticated fund administration, operational support and valuation capability is soaring, too.
Newcomer LaCrosse Global Fund Services is determined to push that trend into a higher gear. Having started in January as a spin out from the US agricultural and food industry giant Cargill, the New York fund administration provider is going after substance over size.
Instead of making a mad dash for assets, it has invested a lot of effort, money and time to start out with a well-rounded offering that clients can use for either basic third-party fund administration or for outsourcing the entire suite of middle-to-back office and related operational functions. An updated version of a global platform that supported Cargill's proprietary trading desk from the 1990s now handles trade processing for LaCrosse.
'We aren't looking to be the largest or fastest growing administrator or outsourcing provider in the market,' says co-chief executive Christopher Kundro. 'We plan to beat competition by offering top quality, comprehensive services at a reasonable price, and by having the capability to service any type of fund, whether it's a basic long/short equity fund or one that's ultra-complex. Most of all, we commit to providing our clients the best client service in the market, regardless of their size.'
Kundro says his firm provides 'high-touch' services that are customised according to the needs of its clients. Each customer is assigned two managers, one to co-ordinate day-to-day activities and the other to monitor the overall quality of service being given. These managers are supposed to jointly resolve any issues that crop up along the way from accounting to reporting, he says.
While LaCrosse currently services the broad hedge fund market, Kundro and co-chief executive Stuart Feffer aim to develop the business by targeting funds that trade complex asset classes, including over-the-counter derivatives, credit, hard-to-value or operationally intensive instruments. Such funds operate under complex structures, which require sophisticated processing, accounting and reporting.
According to Feffer, lack of operational support and fund-administration capacity is slowing hedge funds. 'The primary challenge for administration currently is adding enough capacity to support the growth of the market,' he says. 'There is investor demand, in particular from institutions, out there for funds from talented managers with a compelling investment strategy and sound infrastructure. If our clients can provide the first two, we can provide the last.'
LaCrosse's service-oriented strategy appears to be already paying off. Assets under administration have grown to more than USD9bn, including those of Cargill subsidiary Black River Asset Management and independent funds in Asia, Europe and elsewhere, and the firm already runs offices in 10 countries.
All told, LaCrosse aspires to transform the industry's image with its service-oriented mantra. It is counting on the more than 20 years of hedge fund experience of its two chiefs as well as Cargill's backing and infrastructure to succeed. 'It's our goal only to take on clients where we are confident of providing superior service,' the founders say.
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