We have successfully managed our hedge funds for many years. The funds we had previously raised were primarily through family offices and high net worth individuals; however we were increasingly participating in bids for institutional mandates. These potential new investors were considerably more demanding in terms of corporate governance and reporting. We wanted to investigate ways to capture and monitor risks, and report to our investors in a more sophisticated way.
Our trading style is very specific and we were already very risk focused, but in our own way. We were really just seeking a process for effectively capturing and communicating this.
We spoke with the team at Alpha Finance Advisors. They outlined their 4 Step Approach and how they could work with us to deliver a solution.
During our initial discussions we realised that one of our biggest issues was our culture. Our investment managers work really well together, based on the intimate knowledge of each other and the process, although nothing was organised or written down.
Alpha Finance Advisors took us through their interview process to help us better understand how we looked at value and assumed risk in positions we were taking. They also looked at mechanisms to hedge and consolidate risk, including systems and processes that would allow us to do so.
They designed a framework for describing our way of operating; creating a picture that underlined the specific techniques of our funds, taking into account the specificities as well as more traditional concepts. The framework also allowed investors to understand the investment process in their own terms, crucially helping them to consolidate their exposure to the fund within the rest of their portfolio.
Next they looked at the tools and infrastructure we would need to build our reports. Given our approach, they realised that there was no existing system capable of readily handling our requirements.
After some analysis they selected two systems they thought could be adapted. They then worked with the providers to define the reports we would like to produce, ensuring the whole process was robust and streamlined.
After a full "education" as to how our funds were operating and how to best capture this, they selected a provider. The entire process was vetted by us each step of the way and under a strict NDA. The end result: we had a clearly defined risk dashboard and understood how to use it.
Alpha Finance Advisors worked with the provider throughout the development, making sure the results were in line with our expectations.
