Citigroup Inc. has become the second fund administrator to implement a new technology platform from youDevise specifically designed for servicing funds of hedge funds.
"For the benefit of servicing fund of hedge fund managers around the world, we have pulled together the entire client experience under one seamlessly integrated, globally consistent platform," Neeraj Sahai, global head of securities and fund services at Citi, said in a press release Wednesday.
"Managers have direct, online access to our custody services, our suite of middle-office solutions and all standard administrative reports, resulting in greatly improved efficiency, accuracy, transparency and risk mitigation," Sahai said.
Hedge funds-of-funds managers are increasingly turning to their third-party administrators to provide them with the automation needed to prove their operational strength — and transparency — to savvy institutional investors.
Many investors, including wealthy individuals, endowment funds, pension plans and charitable funds, invest in hedge funds of funds for the all-in-one service of researching funds, allocating assets, managing risk and tracking returns.
"Technology ultimately becomes a differentiator," said Rich Koppel, president of youDevise. "That means far more than just striking monthly net asset values."
Citi officials say that before implementing London-based youDevise's Hedge Fund Information Provider platform, Citi provided only a basic back-office administration and custody service for hedge funds of funds. While the bank will use that platform to strike the official net asset valuation, through it Citi can allow hedge funds of funds to view and evaluate data in a more robust way.
That means hedge funds of funds can analyze liquidity terms of underlying hedge fund investments; track and analyze underlying fund performance; conduct what-if trade-scenario analysis; run pre- and post-trade compliance reporting against investment guidelines; offer real-time dynamic reports on net asset valuations; and automate foreign-exchange hedging strategies for share classes denominated in non-base foreign currency.
Launched in 2006, the platform was first implemented at Northern Trust in Chicago in January 2008. An additional five managers use the platform directly. The platform is integrated with administrators' transfer, portfolio accounting and client interface systems.
One of the world's largest providers of securities services, Citi has $11.3 trillion of assets under custody in more than 100 countries and supporting over 65,000 clients. The bank's hedge fund services unit holds in excess of $60 billion of assets under administration for funds of hedge funds and offers middle-office, custody, securities finance, back-office, cash and liquidity functions.