It has been a year of change and growth for funds of hedge funds and similarly for Cogency. We’ve seen significant activity, as we bring on new clients, release new product enhancements and welcome new hires. As our product offering continues to broaden within the multi-manager environment, an increasing number of individuals in a broader set of roles within our clients' organizations benefit from our solutions. And we now have a new website that better reflects the value we bring to all our stakeholders.

We have established ourselves not just as a software provider, but as a trusted partner in all of our relationships, bringing the strength of our people, product, implementation model, client base and technology to every one of our engagements.

Jeffrey Axelrod
CEO, Cogency Software

As I have learned many times over through various endeavors building accounting systems, it takes time to harden a financial product in the fires of real-world usage, across multiple clients with diverse needs. This experience is what turns a good solution for a single fund into a great solution for an entire industry. Through our clients, we get real life experience in the operational and accounting variations of multi-manager-funds and incorporate these insights into the product. This is what hones one of Cogency’s strongest attributes: an accurate, flexible and intuitive model of the multi-manager business.

Over the past six months, we, at Cogency, have been engaged in many new projects at some of the world’s most prestigious funds of funds and fund administrators, bringing our process and the implicit structure of our product to the fluidity of living and breathing fund entities. Our implementation consultants have helped map the funds’ information into our model, and in each engagement, we learn more about the variations within this industry, even in this area of portfolio tracking and accounting that might seem to be the most codified.

Our accelerating client and employee growth is largely due to the success of these projects and the value that they in turn bring back to our evolving product.

Cogency sits in that place where Accounting meets Operations. Our goal is to have everyone in the organization, from the fund accountant and the portfolio manager to the client relations managing director, working off of a single version of the truth – each with their own ‘filter’. However, there are situations when the detailed accounting requirements conflict with the operational needs of the business, resulting in a proliferation of versions of the truth. Cogency's expertise and strengths is in resolving such conflicts.

Tracking lot-level liquidity on the portfolio and investor capital is one manifestation of this problem.

Portfolio liquidity – In the case where a fund uses average cost basis as their portfolio lot relief method, the classic accounting solution relieves a pro-rata portion of each lot upon redemption, leaving lots around forever. This really torments the portfolio manager who is tracking lot-specific liquidity.

Investor liquidity – In the case where accounting calculates investor's incentive fees as an aggregate of all lots, they traditionally keep an accurate investor-level balance but cannot provide lot level balances. While this works for accounting, it does not provide accurate values available for redemption at a given time if different lots have different liquidity terms.

Over the past 18 months, Cogency’s product managers have worked with clients, accountants, and advisors to solve this problem with custom lot relief and fee calculation methodologies that satisfy the formal and distinct needs of both the accountants and the portfolio and investor relations managers. These solutions allow our clients to maintain a single version of the truth that addresses the requirements of all stakeholders..

Cogency continues to increase the depth and breadth of its product as we draw new business. New features introduced in 2010, in versions 4.0 and 4.1 include:

• Manager and Investor Due-Diligence
  • Questionnaires -- Manager and investor user-defined questionnaires
  • Activities – Meetings, history, participants, topics, documents
  • Outlook Drag/Drop and Sync – Integration with Microsoft Outlook
• Partnership Accounting
  • Definable Cycle -- Configurable accounting calendar to support daily, weekly, monthly, quarterly or ad-hoc break-periods and differing fiscal years
  • Aggregation Levels – Incentive and management fees based on the aggregate value of lot, investor, investor family or fund
  • Hurdle Variations -- Hard and soft hurdle with and without HWM, static or tracking an index, defined as a monthly, quarterly or yearly return, using any day-count method
• Fund Accounting
  • Accounting Lifecycle – User configurable period lifecycle of mid-month and month-end estimates, finals and reviewing stages.
• Platform
  • Report Groups – Easy generation of a set of reports for one or more funds, ideal for generating monthly NAV packs.
  • ScreenPrint to PDF – Instant PDFs with customer branding from all screens
  • Security – Increased granularity levels for data and screen security.

Cogency is pleased to announce the formation of its new advisory board. The Cogency Advisory Board is a thought-leadership group of multi-manager fund and software industry executives that provides valuable insights on alternative investment market industry trends, product development priorities, and service requirements. The Advisory Board reviews and influences Cogency’s strategic plans and priorities.

Members of the Advisory Board include:

• John B. Levitt, CAIA – former COO, UBPAM
• Michele McGovern – former CEO of Iris Software
• David Moshal – CEO, Optimal Markets
• Christopher Rowan – President, Arscientia
• Marita Wein – Partner, Risk Management, Alternative Investment Group