State Street Vision Report Examines Reinvention in the Hedge Fund Industry
July 14 2011 - 9:00AM
Business Wire
State Street Corporation (NYSE: STT), one of the world’s leading
providers of financial services to institutional investors,
released a new Vision Report today, entitled “Hedge Funds:
Rebuilding on a New Foundation.” The report examines the
re-emergence of the hedge fund industry and the new dynamic between
investors, hedge funds, and hedge fund administrators that has
emerged to address sweeping regulatory changes and investor demands
for enhanced fund transparency, liquidity and efficiency.
According to State Street’s Vision paper, today’s post-crisis
environment fund selection will emphasize six critical operational
and risk management elements: investment strategy and performance,
portfolio liquidity, portfolio transparency, reconsideration of
pricing and lockup periods, operational due diligence and the
independence of custodians and administrators.
“The theme of transparency in the hedge fund and fund of hedge
funds market continues to grow,” said Jim Tomeo, chief operating
officer and senior portfolio manager at SSARIS Advisors, LLC, an
affiliate of State Street Global Advisors. “Across the alternative
investment industry, institutional investors are driving the
evolution of all investment channels, from direct hedge fund
investment, funds of funds, to managed accounts and other
structures. Improved investor sentiment and positive inflows
suggest reviving confidence across the board.”
The Vision report is broken into three main sections:
- Technology with a Purpose: The Next
Generation Today — Discusses the integration of risk and return
technology by investment service providers to address asset
managers and asset owners’ growing need for more detailed portfolio
analytics, process transparency, risk management and dashboards to
improve the speed and kind of information they are receiving and
their access to it.
- Using Technology to Adapt to the New
Regulatory Environment — Examines the review of electronic
trading by regulators following the start of the financial crisis
in 2008. Technology has been at the forefront in enabling the
exponential growth of electronic trading and has become the only
solution to effectively meet the challenges inherent in new trading
regulations.
- Portfolio Allocation and
Modelling — A Technological Arms Race? — Explores
technology’s solutions to meet today’s leading global asset
management challenges, including market crowding, pricing
inefficiencies, risk and rebalancing.
“Institutional investors are increasingly taking great interest
in how hedge funds manage operational infrastructure, choose
administrators and provide for governance and best practices,” said
George Sullivan, executive vice president and head of State
Street’s alternative investment solutions group. “Escalating client
demand for operational control and transparency is driving funds to
outsource many responsibilities to administrators experienced in
all asset types and investment strategies. By hiring administrators
to assume a range of services, including data management, asset
class coverage and portfolio risk analysis, fund managers can
concentrate on generating alpha and distributing investment
products.”
For nearly a decade, State Street has provided hedge fund
servicing to help meet the needs of hedge fund clients with
programs such as targeted hedge fund-only implementation and broad
enterprise mandates across all investment types. State Street has
provided traditional asset managers, hedge fund managers,
institutional investors, insurance companies, and fund platforms
with comprehensive risk services that include exposure reporting
and position-based analytics including stress testing, VaR and
what-if analysis, and risk decomposition. State Street also
provides a suite of reporting tools to help investment managers
maintain compliance with the changing regulatory environment
globally.
State Street’s Vision Series addresses key trends and
developments impacting the financial services industry. Previous
reports have focused on technology innovation, pensions, UCITS IV,
exchange-traded funds and sovereign wealth funds. To download a
copy of this Vision Focus report or others in State Street’s Vision
series of in-depth reports, please visit
www.statestreet.com/vision.
About State Street
State Street Corporation (NYSE: STT) is one of the world's
leading providers of financial services to institutional investors,
including investment servicing, investment management and
investment research and trading. With $22.6 trillion in assets
under custody and administration and $2.1 trillion* in assets under
management at March 31, 2011, State Street operates in 26 countries
and more than 100 geographic markets worldwide. For more
information, visit State Street’s website at
www.statestreet.com.
*This AUM includes the assets of the SPDR Gold Trust (approx.
$56 billion as of March 31, 2011), for which State Street Global
Markets, LLC, an affiliate of State Street Global Advisors serves
as the marketing agent.
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