In challenging market conditions, investors demand more transparency and greater control. Shadow accounting services can play a key role in bolstering their confidence.
The ever-evolving hedge fund world continues to deal with the era of the Great Resignation. Fund managers are moving to hybrid structures and using complex asset classes to secure lucrative investments amid market uncertainty.
As investors continue to seek balance between return and risk, it’s critical for funds to be able to showcase scalability as well as an ability to handle complexity, exercise control, and produce good returns.
As a fund grows in volume, it is more likely to expand into asset classes across geographies. As a result, the high degree of control and clarity of reporting–fundamental to investors–becomes even more onerous for the manager to maintain.
Technology and people play the most important roles in ensuring scale, control, and reporting.
Hedge funds haven’t been immune to the impact of the Great Resignation. In fact, they are losing people and are constantly retraining new employees to stabilize operations.
It’s an increasing challenge for firms to ensure they can conduct all back-office functions in-house. Leveraging specialized shadow providers has proven to be a smart alternative for many fund managers.
The importance of accurate data for hedge funds
Especially now, data is crucial. Good control of data is key to healthy operations and good investment decisions. More importantly, it boosts investor confidence through enriched, timely reporting.
The foundation of risk and control in hedge fund operations rests on the granularity of the data available. Making the wrong operational or investment decisions can be costly and will cause investors to shy away–something fund managers never want to see. Investor trust and raising capital go hand in hand.
Not only has shadow accounting helped fund managers scale and provide enriched reporting, it’s also helped solidify confidence during times when scams have shaken the investor community.
A good shadow accounting service provider can add significant value to the fund by providing operations data insights, scale, competency, and good practices. All this helps fine-tune controls and manage risk.
Essentially the shadow accounting service provider works as an extension of funds’ middle and back offices.
The expanse of shadow accounting also determines the degree of dependency the fund has on its administrator.
Absolute control of data and process allows funds to define their destiny with reporting. It also enables operational transformation as the fund manager expands the geography of investment across the wide spectrum of asset classes.
Shadow accounting is not only a double-check on the administrator, it’s a health check barometer that a back office can showcase to investors.
Outsourcing shadow accounting to an experienced provider allows hedge fund managers to invest with confidence. It also provides assurances to investors without having to spend time and effort building or rebuilding in-house teams.
For larger firms with multiple funds, it can simplify complexity and add scale. And for new funds, it can put investors’ minds at ease by showcasing the experienced people that are handling the back office.
How CSC helps
CSC is the trusted partner of choice for more than 90% of the Fortune 500®, more than 90% of the 100 Best Global Brands®, and more than 70% of the PEI 300. We provide tailored administration and strategic outsourcing solutions to support the complex world of alternative asset managers across jurisdictions and asset types while adhering to global regulations and compliance.
Founded in 1899 and headquartered in Wilmington, Delaware, U.S., CSC prides itself on being privately held and professionally managed for more than 120 years. CSC has office locations and capabilities in more than 140 jurisdictions across Europe, the Americas, Asia Pacific, and the Middle East. We are a global company capable of doing business wherever our clients are—and we accomplish that by employing experts in every business we serve. We are the business behind business®.