News round-up: Operational costs to rise 8% in next 5 years; PM extends long/short equity strategy with UCITS launch; Apex snaps up Israel-based fund admin

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Operational costs to rise 8% in next 5 years, predict hedge funds CFOs

Research conducted with more than 100 hedge fund CFOs worldwide, has concluded that operating costs will rise to 8.1% by 2026 to meet increasing appetite for data transparency among investors.

The study, conducted by fund administration services provider Intertrust, revealed that that investors will on average expect to receive updated strategy level performance data every 12 days.

More than four-in-ten CFOs (42%) expect investors will require live or daily updates on strategy level performance data and 31% anticipate having to supply this weekly. 

With investor reporting demands expected to rise exponentially, two-thirds (65%) of CFOs anticipate having to expand their technology framework over the coming five years, while almost as many (60%) will scale up their in-house finance team, said the research results.

“Demands for more data is a growing phenomenon among investors globally. Hedge funds started becoming more transparent some years ago but to meet increasing data requests they must either invest substantially to build systems and technology to manage the data in-house or outsource,” said Jonathan White, Global Head of Fund Sales, Intertrust Group.

“The in-house route is fundamentally complicated and costly, requiring they become managers of technology and operations as well as managers of assets. Alternatively, outsourcing partners that have already invested significantly in modern systems can deliver high quality services to fund managers, who can then focus on managing assets.”

Almost four-in-ten (38%) of the CFOs surveyed said they will outsource more functions, while a quarter (26%) will retain their existing balance between outsourcing and insourcing.

The research was conducted among 100 hedge fund CFOs located in North America, Europe, the UK and Asia with an average of $7.2bn in assets under management.

 

Ex-Harvard PM extends long/short equity strategy with UCITS launch

Long/short equity manager Pembroke is launching a UCITS vehicle following the three-year anniversary of its Cayman vehicle.

Launching at the end of May on the Italian Hedge Invest (HI) platform, the Fund will provide European investors with access to emerging markets.

The Pembroke low-net long/short strategy, launched in 2018 by former Harvard Endowment Portfolio Manager, Sanjiv Bhatia, aims to deliver consistent uncorrelated returns, in the 10-12% range, with low volatility and controlled drawdowns.

Pembroke was launched on the BennBridge investment platform in 2018.

The new vehicle, HI BennBridge EM Absolute Return UCITS Fund, will closely mirror its flagship Cayman fund. It is a liquid strategy targeting high-quality returns uncorrelated to market performance, through efficient portfolio implementation and tail risk hedging.

Many investors contemplating EM do not want to assume the volatility and the drawdowns typically associated with these markets,” said Bhatia. “The Pembroke UCITS Fund seeks to offer a solution for these investors, as well as providing a source of uncorrelated alpha and reduced volatility for multi-manager hedge fund portfolios.

“We believe our focus on controlling volatility and drawdowns helps investors achieve similar returns through the cycles, with much less risk.”

The Cayman strategy returned over 10% annualised with a Sharpe ratio of 1.83 and 5.7% volatility since its inception in April 2018 (net of fees).

 

Apex snaps up Israel-based fund admin

Financial services provider Apex has acquired fund administration business Tzur Management which has offices in Tel Aviv, Israel and New York.

The acquisition of Tzur will add 90 employees, AuA of US$13bn and a new jurisdiction to the Group’s footprint, said Apex.

Founded in 2011, Tzur is a full-service, multi-disciplinary fund services manager serving clients in the global alternative investment market.

“The addition of the Tzur business enables us to expand into the Israel market and further strengthen our regional presence,” said Peter Hughes, Founder and CEO of Apex Group. “As the alternative funds industry continues to attract capital, we will continuously evolve our offering to provide tailored advice and support to these investment strategies and structures.”

Terms of the transaction were undisclosed.

Stephanie Taylor

Head of Event Content, HFM

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