HedgeMark - Best Managed Account Platform

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2015 proved to be an excellent year for HedgeMark. Since BNY Mellon's acquisition of HedgeMark in May 2014, it's thesis regarding the strategic value of housing a dedicated managed account business within a global asset servicing organisation has been validated. 

"Being tied to a global financial institution is a critical factor when investors are evaluating dedicated managed account (DMA) providers. Last year, we closed several new dedicated managed account (DMA) clients and launched more than 20 new DMAs for existing and new clients, who are shifting from commingled hedge fund investments into hedge fund managed accounts," comments Andrew Lapkin, CEO of HedgeMark. 

To illustrate HedgeMark's recent business growth, Lapkin confirms that across the range of managed account services that HedgeMark provides, including liquid alternative mandates, at the end of 2014 HedgeMark had platform assets of approximately USD5.2bn. By the end of 2015, HedgeMark's platform assets had increased to USD8.8bn. 

DMAs are typically single-investor funds established for the exclusive use of an institutional investor. These structures allow an investor to maintain greater control over their assets, receive full position-level transparency and customise the account structure as well as specific investment strategies. Large institutional investors such as public and private pension plans and fund of hedge fund firms have been the most significant users of DMAs as this option is better suited for those investing USD100mn or more per managed account. 

"The large pension funds want to have their own private DMA platforms and FoHF managers are now also embracing the DMA model because they too want greater control, governance and transparency of their hedge fund assets." 

"FoHF managers may have sector-specific or asset class-specific fund-of-funds that can allocate to the underlying managed accounts. In many cases, FoHF managers are allocating assets into managed account structures, using a multi-investor DMA as a core building block for their existing FoHF products, for new FoHF products, as well as for the advisory services that they provide to institutional clients," explains Lapkin.

HedgeMark is regarded as a pure play DMA provider. HedgeMark does not perform investment due diligence or manager selection. The HedgeMark DMA model, says Lapkin, empowers the investor to select the managers that it wants on its DMA platform "and we work them to negotiate an investment management agreement and operational onboard the manager. The fund selection and due diligence functions are performed by the investor or its advisor. 

"Our core competency is helping clients to set up and operate a private DMA platform. It's a very clean model compared to others in the marketplace where core competencies may be investment management or investment banking rather than asset or investment servicing." 

Adds Lapkin: "An investor might work with a consultant or an advisor in terms of selecting the fund managers for its DMA platform but when it comes to structuring, launching and operating the funds, we believe that a global custody-type organisation is a better fit."

HedgeMark supports the full breadth of hedge fund strategies including equity-based strategies, credit strategies, global macro strategies, high convexity strategies, risk premia strategies, amongst others. "We've seen a mix of strategies and that's what helps differentiate HedgeMark from the competition, some of who perhaps cannot accommodate more complex, derivative-heavy strategies that involve multiple counterparties."

On winning the award, Lapkin comments: "We are honored to receive this award from Hedgeweek, a premier voice in the alternatives industry.

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