The upheaval of 2008 may be in the rearview mirror, but for multi-manager investors, the need to keep up with manager redemption terms and avoid exposing their fund to a liquidity mismatch is as critical as ever. Their investors have come to expect it, for one thing, and it’s a key part of the operational diligence that makes for sleepful nights.

That’s all very well. But gathering the information needed for a liquidity schedule that accurately reflects redemption possibilities is a challenge—especially given their ever-changing nature. To pull it off, an investor into hedge funds needs to take a multipronged approach to record keeping:

• Track tranches for each subscription
• Track transfers and assignments for side pockets
• Track monthly appreciation of each tranche
• Accurately model each manager’s liquidity terms
• Match internal records of redeemed tranches with the managers’ records

In an ideal world this information would be captured in a centralized hedge fund exchange — a prime-broker for fund of funds — making liquidity easy to track. The reality is quite different though ...more...

Cogency's professional services group continues to expand the services it provides to our clients in our Lifecycle Engagement Model. We do this with automation tools, best processes, and professional services that get you through any sort of middle or back office processing crunch, from initial engagement and throughout the lifetime of our relationship. As part of our full-service offering, we help clients:

• on-board new and existing funds
• think through and model their fund structure
• maintain internal books and records
• automate administrator reconciliation
• implement best practices

Since 2009, we have seen firms evolving their fee structures in order to attract and retain capital. Cogency's latest release of its Partnership and Shareholder Accounting module stays current with the evolving needs of our client base:

• Management fees tiered based on invested or leveraged capital of an investor or investor family, in a share class, fund or fund family
• Incentive fee aggregated by investor or investor family, within a fund or fund family, with hurdles and claw-backs.

• Incentive fee hurdle after a down-year based on high-water-mark, beginning capital, previous cycle-end hurdle or other custom value
• Pushing Fees from feeder funds to the master fund, in light of Section 457A of IRS code
• Fund hierarchy fees and allocation, in a single operation, in order to handle cross-fund dependencies

Cash Projection is a key requirement for cash management, portfolio construction, and liquidity planning. It pulls together information from your financial books and records, operational research, and rich supporting reference data to quickly and easily see where you are today, and where you are likely to be at any future timeperiod.
Cash Projection is configurable so that each client can specify what standard accounting data and non-standard options to include in the projection:

• Accounting transactions
• Holdback terms and funding days
• Payment schedules for accruals
• Proposed trades and capital inflows
• plus some key non-balance-sheet items

As you keep your books and records current, the cash projection is always current too – as far out in time, and at whatever intervals you need to see it. You may also choose to include unfunded commitments, proposed portfolio trades, planned investor cash flows or other ad-hoc adjustments in the cash projection.

For more information on Cogency’s current release, contact John Peterson, Managing Director of Business Development and Sales. John.Peterson@cogencysoft.com