A detailed liquidity report of an underlying portfolio of hedge funds, one that could be dynamically updated, was the Holy Grail for many funds of funds in the dark days of 2008. Proper liquidity reporting is underpinned by effective data and tools. It requires a degree of investment in technology that can be proactive, agile and responsive.

One of the real tests of any portfolio management system occurs when things go wrong: in the world of money management, operational failures, for instance on the part of a business further down the service provider chain, can force the portfolio manager to re-evaluate retrospectively. Can he be sure that such revaluations are being consistently applied, especially if multiple individuals within the same firm are juggling dozens of spread sheets? Once mistakes creep into the historical portfolio picture, they can be difficult to track down and correct, and they can continue to have an unforeseen impact on reporting further down the line.

Beyond the problems of effective performance tracking, investors in hedge fund portfolios today want to feel they have a better grip on what is happening in underlying hedge funds. This means being able to view a more complete operational picture. Their questions cover key issues relating to fund liquidity, including whether funds have the ability to gate withdrawals, whether gates have been initiated, the expiry of each tranche lock up, and what the options are to reduce lock ups and when. Better information on the liquidity scenario can deliver important additional advantages to the portfolio manager.

It all comes down to a question of confidence: can an investor feel confident that a trade has been properly executed? Has it been confirmed by the relevant custodian and underlying transfer agent? How long does it take to receive the estimated and real NAVs? Do they always come in on time? Are communications with relevant parties secure and dynamic enough to process real-time information flows?

With a more detailed picture comes a higher degree of confidence in the underlying investment and a superior level of reporting to end investors when required. This also helps the portfolio manager to allocate further funds more efficiently.

Migration of servers to new high security platform will offer clients more flexibility in their operational choices.

Hamilton, BERMUDA, July 2012: Comada, the provider of transaction-driven software solutions for investors in hedge funds, has migrated its servers to a new next-generation data centre hosted by QuoVadis Services Limited. The new Infrastructure-As-A-Service (IaaS) platform will bring considerable advantages to Comada’s customer base, including users of Comada’s award-winning M.A.T.ware software.

The new platform has been built using the latest generation networking equipment, high speed SAN for data storage, and servers designed for high density CPU and memory. It enhances the levels of security Comada can now offer its clients, with options for either multi-tenant or dedicated infrastructure. The platform also supports Comada’s programme to offer clients more flexibility in the way they use Comada technology.

Said Rupert Vaughan Williams, co-founder of Comada: “Security is a key requirement for today’s fund managers and their investors. With QuoVadis we are still able to offer clients robust solutions when compliance requirements mean they are unable to host software or data in a multi-tenant environment.”

Comada’s M.A.T.ware software is designed to be highly scalable, allowing it to be seamlessly deployed across a multi-tenant environment, along with highly configurable reporting features for fund managers and investors. Its scalability for both small and large firms in the alternative investments space requires a hosting environment that can meet the most stringent technological due diligence criteria.

Said Gavin Dent, CEO of QuoVadis Services (QVS): “QuoVadis has provided IaaS hosting to Comada for eight years, working with the company to support their fast growth and technology evolutions. By focusing on the performance, availability and security of the underlying platforms, QVS allows Comada’s team to focus on evolving the software at the heart of their services.”

About Comada
Comada is a global technology company specialising in building and implementing software solutions for the alternative investment industry. In particular, Comada’s flagship M.A.T.ware product delivers an unprecedented level of interconnectivity and transparency to the portfolio management and STP process in the alternative investments space. Praised for its flexibility, M.A.T.ware can be scaled to suit the needs of family offices as easily as large custodian banks. M.A.T.ware is already being used by custodians, fund administrators and funds of hedge funds. For more information, please go to www.comada.com.
About QuoVadis

Founded in 1999, QuoVadis Limited is an Internet security provider with operations in Switzerland, Netherlands, the United Kingdom, and Bermuda. The company is a global provider of digital certificate and digital signature services used to enhance privacy and confidentiality, data integrity, and strong authentication over the Internet. Drawing upon the company’s experience and investment in high performance datacenters, QuoVadis Services Limited (QVS) provides secure collocation, virtual hosting, and disaster recovery services to international organisations. For more information, please go to www.quovadis.bm.

Since the subprime crash of 2008 the alternative investment industry has been focusing in unprecedented detail on the issue of operational risk. This is being driven forwards from a number of quarters, including by regulators and investors concerned that assets might be placed in jeopardy as a consequence of future systemic failures. There is a general appreciation, however, that within the hedge funds industry there are systemic issues in the way business is being done that will need to be addressed if operational risk is to be reduced.

The investor community in particular is seeking solutions that will allow it to improve the efficiency of the hedge fund trade cycle, providing for enhanced interaction with fund managers and service providers like administrators and custodians.

Talk of ‘transparency’ is more prevalent than ever: we have statements to this effect from regulators and investors (e.g. in the recent survey of managers and investors published by Ernst & Young)[1]. But can we properly define what we mean by hedge fund transparency and produce a benchmark industry standard?  Commentators have discussed the transparency of the trade, for example in equities pricing, but how can you translate this into hedge fund investments? In the post-Madoff environment, transparency now means proper verification of every stage of the trade, from the initial investment in the fund to where the assets are held.

From the perspective of the investor, for example a typical pension fund or family office, an investment in a hedge fund is treated as a security, and with that come concerns about liquidity: where is the investment held, what it is worth? How is it treated from a legal perspective?

In short, investors would like to be able to see their alternative investments alongside their other assets, be they exchange-traded securities or long only mutual funds. The problem is that hedge funds – and their private equity equivalents – are more opaque and are still seeking solutions that will allow them to deliver this degree of enhanced reporting to the investor community. It is difficult to get away from the spread sheet when it comes to managing an alternative investment portfolio: finding out what something is worth is hard enough using Excel; what about providing a confident measure of liquidity?