A move to an operationally-complex new vehicle

The challenge: 

A multi-strategy hedge fund manager had been investing in a variety of credit instruments for a number of years, and its in-house administration team had always been able to accurately reconcile securities positions and the portfolio’s NAV. But when the firm decided to expand into bank loans holding a variety of term loans and revolvers, both syndicated and originated, it became an operational headache overnight.

The portfolio’s day-to-day investment positions were unclear, and NAV calculations required numerous phone calls with agent banks. A reliance on disparate data feeds and manual spreadsheets made processes paper-intensive and prone to human error, adding a significant layer of risk.

Clearly, an operational overhaul was urgently needed.    

We don't have a problem accommodating timely data flows from many sources. Our response rate is close to 100% -- something that few managers can achieve on their own.

Our solution:  

We don't have a problem accommodating timely data flows from many sources. Our response rate is close to 100% -- something that few managers can achieve on their own.  

Thanks to our open-architecture approach and dedicated bank debt team, we provided a specialized processing platform that integrates accounting systems and bank debt data feeds. This advanced operating environment allowed the firm to automate and streamline its processes while bringing them up to institutional quality. Our solution:

  • Enables electronic capture and the independent integration of both primary and secondary sources of bank loan information. 
  • Embodies best practices honed over more than a decade of experience in processing a wide variety of credit activities — even payment in kind and non-pro-rata events.
  • Verifies positions with agent banks, the investment manager, and custodian. Few managers have internal systems capable of such tri-party verification.
  • Provides institutional-quality loan reports via our Manager Dashboard. The firm can also provide its investors with bank loan-specific reports through our Investor Dashboard reporting tool.

The benefits:

  • Best-of-breed technologies. Our platform utilizes Advent Geneva®, which provides electronic trade capture, automatic daily reconciliation, and GAAP-compliant financials. Other key components include third-party data providers such as Markit and Wall Street Office, and the Virtus Partners loan data feed, which links directly with Geneva for faster, more accurate processing of loan positions.
  • Increased transparency.  Our platform makes it easy to scrutinize individual positions, spot potential errors, or answer queries regarding NAVs.
  • Simplified reporting.  Key loan data is aggregated in a single report, and the firm can quickly and accurately generate customized loan reports for its investors.
  • Ongoing support.  Our specialized bank debt team is on call to answer queries and make sure the firm is keeping up with best practices.

The results: Greater stability and efficiency

Not only has the firm reduced the time spent in NAV production by 25 percent, it enjoys much greater confidence in the accuracy of its portfolio data. In turn, investors gain comfort from third-party administration and a state-of-the-art processing system. 

Our Solution for Investment Managers

Turn infrastructure into competitive advantage

Our comprehensive investment operating platform is designed to support all major asset classes and investment vehicles across diverse investment strategies and jurisdictions

Learn more
Image: SEI office with art