Hedge Funds

Hedge Funds

Prior to the most recent financial crisis, money managers had a conceptual awareness of risk, but many did not make understanding their risks a priority. After the longest bull run in the history of financial markets, a thorough, independent measurement of risk by an outside advisor was often overlooked. The financial crisis and the associated global securities firm failures caused a dramatic shift in the way managers handle their risk processes. Customers of hedge funds are demanding better disclosures of the holdings and inherent risks of the funds in which they invest. Fraud is seen as an ever-present danger to investors. Leverage is perceived as a key risk to investors. Its measure is viewed as one of the key hedge fund risk measurements. The experience of the managers is a key reason for investors to select a fund. Once invested, personnel risk is extremely important to investors and a change in management is a key reason for investors to exit a fund. Investors believe that the manager’s experience and the fund’s performance are the most important criteria when selecting a fund, and a change in either may cause investors to consider exiting a fund. Investors want to know their risk exposure. This results in a need for measurement of a hedge fund’s risk and the allocation of that risk to each investor. The cost of implementing risk infrastructure for hedge funds can be high. With Gateway Partners, that cost is distributed between many hedge funds, as we provide the necessary infrastructure. This can result in cost reductions of over 50% for the hedge fund. When taken together, these risks show the importance of having an independent overseer of risk management for hedge funds. Gateway Partners provides that oversight with our vast experience in the very asset classes in which hedge funds invest. Our meticulous approach to risk management as an independent advisor provides additional peace of mind for hedge fund investors, much like auditors do for public companies.

Some of the Available Services for Hedge Funds

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