What three key pieces of advice do you have for emerging hedge fund managers seeking to differentiate themselves in a crowded market?
Firstly, make operational efficiency an asset. Lower costs and higher levels of insight, not to mention the ability to demonstrate due diligence and provide strategic shareholders flexible ways to invest in your strategy, helps create competitive advantage and accelerate growth.
Secondly, Grow alpha, not operations. Best-in-class operations do not necessarily require a dedicated team and complex infrastructure, and outsourcing the most complex areas of operations lets fund managers leverage expertise and technology where it’s needed most, while delivering economies of scale as assets grow.
Thirdly, choose a partner over a provider. There is no shortage of pedigreed service and solution providers in the hedge fund space, but a boutique partner with deep industry expertise and a focus on providing a high-quality personalised service tends to deliver more value to the emerging fund manager.
What opportunities do you see emerging in the industry in the near future, and how are you positioning your firm to take advantage of these opportunities?
As investment complexity, regulatory requirements, and cyber threats continue to grow, operational excellence becomes an even more important differentiator in the race for alpha. While this can be seen as a disadvantage for emerging managers with fewer resources on hand, we see it as an opportunity for our clients to future-proof operations and clear a path for growth.
By outsourcing critical operational activities, emerging managers have the opportunity to access best-in-class expertise and technologies to improve insight, gain efficiencies, and create a scalable infrastructure.
How are hedge funds managing liquidity risk, and what steps are they taking to ensure they can meet redemption requests?
As global economic uncertainty persists and returns remain hard-won, allocators seeking compensation for decreased liquidity are demanding investment managers have solutions in place to manage liquidity risk and meet redemption requests. It’s no surprise then, that hedge funds are investing in technology solutions that deliver actionable insight on how fund investments align with liquidity.
Our solution helps managers gain control of liquidity risk inherent in the industry. While an accurate IBOR is our primary benefit for most clients, our customisable client-portal provides managers and stakeholders with access to portfolio and shareholder liquidity metrics to help assess sector composition, identify top holdings in the fund and shareholder liquidity ratios for custom allocations via a SMA or fund-of-one structures.
What are some of the biggest challenges your firm is facing in the current environment, and how are you overcoming them?
As a boutique provider in a market dominated by global brands, we have to work harder to differentiate our capabilities and build operational confidence as well as brand awareness.
We overcome our perceived challenges by providing an exceptional, personalised service tailored to the unique needs of each client, not often provided by larger competitors. We deliver enterprise-grade solutions at a scale and cost that makes sense for emerging fund managers, family offices, and fund administrators. Our native cloud-first platform can be delivered with a smaller footprint at a lower price-point, and then easily scaled up.
Are you leveraging technology to increase efficiency and reduce costs in your firm’s operations? How have you been putting this into effect?
Our platform was born in the Cloud, with all of operational advantages that comes brings. We deliver a complete, accurate book of record to serve as a single version of the truth for the front, middle, and back office, while automated daily reconciliation enhances oversight and control for added value, and is fast and easy to implement and scale. As well as providing clients with the technology to succeed, we can also provide a fully outsourced model for those wanting to remain focused on what they do best.
We’re laser focused on providing streamlined operational flows that save clients both time and money. In our experience, there is no such thing as a one-size-fits-all solution, so we provide modularised solutions that can be tailored to a fund’s specific operational requirements. Our Self-Administered model provides a low total cost of ownership that permits clients to direct our expertise in the areas they need help the most – for example onboarding and process automations – while allowing them to take on additional day to day responsibilities as they become more confident. Our Fully Managed model meanwhile, features a straight-through process with daily valuation and reconciliation that allows fund managers and family offices to focus their attention on growing assets and not managing their operation.
Eric Sontag, President, PortfolioShop – A proud graduate of the City University of New York at Baruch College, Eric began his career in financial technology as a Business Analyst at AIG/Royal Alliance Associates, an independent broker dealer. It was there that Eric discovered a shortage of flexible reporting and outsourced back-office solutions that were easy to acquire and implement. This theme would eventually become the genesis for the creation of PortfolioShop’s cloud based SaaS platform. As co-founder and technological lead, Eric and his team work closely with clients to ensure that the information they rely on is up-to-date, accurate, and impactful. Eric currently resides on Long Island, New York with his wife and two children. When Eric isn’t at his desk assisting clients, you’ll find him cycling, researching fantasy football, riding rollercoasters, and scuba diving.