Meridian Fund Services – Best North American hedge fund administrator
Meridian Fund Services administers funds across all hedge fund structures (single strategy funds, master-feeder funds, FoHFs and separately managed accounts) and private equity funds. At present, the firm has approximately USD15billion in AuA. It services approximately 90 clients across 231 funds, which collectively have more than 5,700 separate investors.
Tom Davis (pictured), CEO, explains that the main headwind affecting the firm last year was the fact that towards the end of the summer some of its funds had performance difficulties. “AuM went down slightly and the new funds that we were getting in didn’t offset the decreasing value of some of our existing funds,” explains Davis.
Unlike 2008, however, Meridian didn’t see a huge wave of redemptions at the end of 2011. “We had one major client give back their third party money and turn into a family office and a few smaller managers shut funds down, but at the same time we were able to get new funds on board,” says Davis, noting that net-net the firm gained about 30 new clients in 2011.
Meridian prides itself in providing a high level of service to start-up managers. Davis likes to refer to what they do as offering “an institutional-quality service at an affordable price”. And whilst the firm definitely has plans to expand into Europe and Asia, right now the core focus is on servicing US managers.
“In my opinion, the US is going to be the driver that gets everyone out of today’s economic doldrums. We want to support a lot of the managers that are spinning out of prop desks to start their own funds. The entry barrier in terms of cost is getting higher so what we’re trying to do is lower that barrier for these new managers,” states Davis.
To stay ahead of the ever-growing demands being placed on fund administrators to develop technology solutions for hedge fund clients, Meridian has focused its technology efforts on building a strong in-house team of skilled programmers located in Cambridge, Massachussetts. The firm’s primary data processing platform is PFS-PAXUS, which interfaces seamlessly with the systems of investment managers, prime brokers and pricing services.
Says Davis: “One of the reasons we’re able to provide a high level of service at a reasonable cost to start-ups is because of our entire IT platform. What we like about PFS-PAXUS is the fact that different modules are able to integrate with each other: that brings us huge savings in time. Also, it’s very flexible. Our internally developed technology, called Meridian Reporting Tool (“MRT”) allows us to access information from PFS-PAXUS seamlessly.”
This allows Meridian to export data directly from PFS-PAXUS and process it in a customisable reporting format in MRT; a middle-office value-add that managers are increasingly looking for from their fund administrator.
“We’ll use other systems that we think suit our particular needs well; for example, we use a product called FASCET for security processing and daily reconciliations. We process this data outside of PFS-PAXUS and then feed it back in, which works well for us. The governance tool we use – ViewPoint - also integrates well in our technology platform,” adds Davis. He confirms that Meridian is currently working closely with PFS-PAXUS on a Form PF solution as the next major value-add to its clients.
On winning the award, Davis comments: “We’re thrilled to win this award, especially as this is voted for by Hedgeweek’s readership. We feel this vindicates our decision to open a New York office back in 2004 in order to be close to our clients.”
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