Amidst shrinking budgets and the need for better trading and risk management technology at hedge funds, US institutional broker Concept Capital has launched CONCEPTONE, a front-to-back office services platform for hedge funds.
The firm claims the new platform, which combines portfolio, order and execution management, real-time risk and profit-and-loss monitoring, and access to multiple prime brokers, will provide the services hedge funds need in today’s environment at a low cost.
According to Michael Rosen, managing director at Concept Capital, hedge funds have been hit by falling assets under management, both because of declining asset valuations in the current financial crisis and rising redemptions. This has reduced their budgets but at the same time, funds need to improve trading and risk management to attract institutional investment.
As a result, he contended, hedge funds need to re-evaluate their business processes and cost-bases. “Right now we are at the crossroads: the minimum acceptable requirement of what you are going to have to do in order to qualify for institutional allocations has gone up, and your budget has gone down,” Rosen told theTRADEnews.com. “The tools that hedge fund managers require to be successful in this day and age need to be more capable. Real-time risk monitoring on the front end is something that allocators of capital are going to require. The ability to produce analytical and accounting reports on a real-time basis is also something that will be necessary as part of the due diligence process.”
He added, “Hedge fund managers have to find a new, better, more cost effective way to operate their businesses, and I think CONCEPTONE is that solution.”
In addition to the trading, risk management and real-time reporting and monitoring functions, CONCEPTONE provides hedge funds a middle- and back-office infrastructure and fund administration services, including independent portfolio verification.
While Concept typically targets small and mid-sized hedge funds with its services – i.e. those will less than $1 billion assets under management – Rosen said the CONCEPTONE platform could be equally useful to larger funds.