Back before the holidays we wondered aloud if self-administered funds, common in the United States and less so in Europe, had any future. We suspect not. Now, with former Made-off sponsors (like Union Bancaire Privée) shying away from integrated shops, and other firms recommending that their investors pull any capital housed in such institutions, the new rule of due diligence might include the checklist item “do you use a third party administrator?”
Lots of luminaries seem to enjoy claiming that the infrastructure of “Modern Finance” is finished. We prefer to think that the old regime is finished, but that a new one is waiting anxiously to take its place.
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I am in love with Slapchop Vartanian
Agreed. Excellent post, enjoying your work on here Ms Private
Anyone claiming a regime is dead or there’s a massive paradigm shift is delusional.
Remember the dot Bomb – “profit-based valuations are dead”?
The infrastructure is not dead. When investors feel like investing, the institutions and structures will re-emerge to allow them to do so as they wish.
Well, by “institutions” I guess I mean except for Bear, Lehman, ML, and about 75% of the hedge funds, but there WILL be institutions there.
I think.
yeah, there will be normal advisors with outside clearing firms that arent looking to be billionaires or start a fund or any of that…just helping people make decisions on an agency basis
advisors and brokers will lead the american public out of this shitshow and back to the market just like they always have, these black boxes and dark pools and stifling armpits or whatever they’re being called?
not so much
TRB
It’s all about that NAV calculation by a trusted third party. Period.
Well, FGG funds were adminsitered by an independent administrator. Great deal of good it did there.
Fund Administrators don’t have the expertise or resources to verify many of the valuations provided that are used to calculate NAV. These are low margin businesses who’s fees are constantly getting squeezed by either new competition or market conditions, resulting in a mostly unqualified staff (Bangalore?) doing much of the work. Unfortuately, s**t in = s**t out is the norm, especially for illiquid, mark-to-model assets.
So as a result of the UBP edict, Millenium goes and hires GlobeOp to take on more functions for their funds. Ironically, GlobeOp has a checkered past (see Archeus vs GlobeOp) and Hans Hufschmid seems an odd choice to be the posterboy for credibility.
@7 – True that fund admins have trouble finding and keeping good staff, but most of the work isn’t done in Bangalore… it’s done in Bermuda, Cayman, Curacao, Dublin, etc.
The hedge fund industry is in real trouble if we treat UBP as a thought leader….
For the form of the new regime, I’d suggest a study of Soviet-bloc finance, transposed to a G-20 of green command economies. But never fear, it need not even be the end of financial innovation. The Soviets did invent the Eurodollar, after all.
Pathetic. guess UBP is trying anything after Madoff loses…Too little too late guys!