Treasury operations due diligence is expanding well beyond the historical focus on cash controls, and now includes a more evolved and optimised manager’s treasury function. This is not only essential to minimising counterparty risk, but also key to reducing costs and adding incremental yield.
That’s according to a new white paper from Hazeltree, a provider of integrated buy-side treasury management solutions.
The paper says that institutional investors are continuing their allocations to alternative investments at a rapid pace, with record inflows reported. This trend is likely to continue into 2018, with strong allocations to hedge funds, private equity, and real estate asset classes. That said, most of the allocations are going to the larger managers having consistent returns and more robust operations, with a clear focus on treasury. Capital allocations are skewed toward managers who can demonstrate robust counterparty risk management, asset protection and transparency, timely liquidity, reduced funding and operational costs, and straightforward fees.
“Asset allocators are focusing beyond performance to consider concentration risk, counterparty exposure, borrow costs, margin requirements and cash management – all now integral to their due diligence reviews and ongoing manager scrutiny,” says Sameer Shalaby (pictured), CEO of Hazeltree. “Fund managers should focus their attention on implementing structured treasury processes and technology to respond to their investor demands.”
The white paper, ‘Institutional Investors Drive Treasury Operations Excellence’, summarises the treasury issues which matter most to allocators and those which set managers apart from the crowd, and also includes a list of key questions relevant to treasury operational due diligence.
