Case study

Virginia-Based Long/Short Hedge Fund Offering Investment Management Services

BUSINESS SITUATION

  • The client wanted to organize its performance reporting practice by developing a policy statement document and composites based on actively managed strategies.
  • The client intended to appear for the GIPS compliance review, which would enhance credibility and aid future marketing efforts.
  • The client was assessing deployment of a composite management tool. However, creating composites and generating customized reports proved to be a challenge. The client wanted a more easy-to-use and flexible solution.

SGA APPROACH

  • Deployed one analyst to co-ordinate with and support the client in the GIPS journey by comprehending guidelines, identifying gaps in the firm’s existing policies, analyzing broker trade reports, and making returns calculations.
  • Understood the firm’s client contracts, created policy statements, and considered mix fee structures, which were used as inputs for the composites’ returns calculations.
  • Based on individual strategies, the composites were created using mandated accounts, which met inclusion criteria and relevant benchmarks.
  • Presented the measure of internal dispersion using standard deviation of individual portfolio annual returns.

ENGAGEMENT

A dedicated analyst support in the preparation for GIPS compliance through in-depth analysis of the firm’s existing policy documents, strategies, fee arrangements, payment mechanisms and portfolio-level trades.

BENEFITS AND OUTCOMES

  • The client managed to clear the GIPS compliance review process with only minor suggestions during the review.
  • The renewed performance reporting mechanism also met the local regulator’s review requirements.
  • The client was able to conveniently track and report performance on a periodic basis.

KEY TAKEAWAYS

  • Prepared a policies and procedures document, composites, and customized reports for active strategies within 2 months.
  • Provided support at ~35% lower costs as compared to onshore GIPS consultants.
  • A big thank you for your diligent work on GIPS. We are verified!” (client’s e-mail post verification).

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