2014 was a big year for New York-based HedgeMark International, LLC. On May 1, 2014 the firm became a wholly-owned subsidiary of BNY Mellon.
“A key part of our strategy, which dovetails well with HedgeMark’s acquisition by BNY Mellon, has been to focus exclusively on supporting institutional clients in the development and operations of their own dedicated, private managed account platforms. Our approach is resonating well in the marketplace among some of the largest institutional hedge fund investors who are increasingly looking for more tailored investment solutions and wish to move their assets into managed accounts,” comments Andrew Lapkin (pictured), CEO, HedgeMark.
In late 2012, HedgeMark launched its Dedicated Managed Account (DMA) offering to provide institutional investors a customised hedge fund managed account solution with an integrated position-level risk analytics platform to provide high-frequency risk and performance reporting.
As of 2 February, 2015, HedgeMark’s DMA assets totalled approximately USD1.6bn. HedgeMark also provides a subset of their core managed account services including risk, performance, and guideline monitoring for US Liquid Alt Managed Accounts with approximately USD4.1bn AUM as of 16 February, 2015.
Currently, HedgeMark has more than 20 clients in total across its DMA and risk analytics solutions. Certain client relationships begin with HedgeMark providing risk analytics and related services affording such clients greater transparency into the risks in their hedge fund portfolios. This approach allows clients to start using risk data and analytics to evaluate their portfolios as they consider a potential migration into managed accounts.
“By incorporating sophisticated risk and performance analytics, and thereby empowering clients to more effectively leverage the transparency benefits of the managed account structure, it really takes our offering to the next level,” says Lapkin.
Lapkin points to four key elements that help explain how HedgeMark tries to differentiate itself from others in the marketplace.
“The first is the flexibility and customisation it offers clients. The DMA solution is open architecture and can support different strategies, service providers, counterparties and jurisdictions as well as different types of structures ranging from individual funds to umbrella structures.”
“The second is our risk and performance analytics. A key differentiating factor of the HedgeMark offering is our ability to provide risk analytics on both platform assets as well as non-platform assets. This capability allows HedgeMark to provide clients with risk information for legacy hedge fund investments as well as long-only assets, offering a more comprehensive or enterprise view of the client’s overall portfolio risk exposures.”
“The third is that BNY Mellon’s ownership of HedgeMark provides real institutional stability. If you’re building a private managed account platform, you benefit from partnering with an institutional platform provider who has scale and is going to be with you for the long run. As our DMA Solution results in a shift of key operational functions from the hedge fund manager to HedgeMark, clients value BNY Mellon’s experience and reputation in handling core non-investment functions and services,” emphasises Lapkin, adding that the final element is simply the depth of expertise across the team.
On winning the award, Lapkin comments: “We view this Hedgeweek award as a validation of our unique business model and as a testament to the hard work that our team has put into delivering world class service to our clients.”
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