About US

Fund Accounting Services

As a freelancer, we specialize in gathering financial statements from banks, brokers, and other fund service providers for reconciliation with internal records at the close of each accounting period. Our approach employs a tailored accounting system designed specifically to cater to the unique requirements of your hedge fund. We meticulously record all investor and financial transactions in this accounting system to compute incentive and management fees, as well as carry forwards in accordance with your fund's offering documents and corresponding accounting procedures.

Investment Accounting

Our team possesses extensive experience in accounting for a diverse range of financial instruments, including but not limited to:

  • Options
  • Equities
  • Corporate bonds
  • Fund of Funds
  • US and non-US government securities
  • Repos
  • Futures and futures options
  • Foreign exchange trading
  • Cash contracts
  • Derivatives and derivative options

The Investment Manager collaborates with us to determine the precise method for entering investment transactions into our fund accounting system. These transactions can be entered either on an aggregate basis, an individual basis, or a combination of both, tailored to best suit your fund's needs. Typically, investment data is directly imported from a prime broker into our software, ensuring the timeliness and reliability of our reports.

We generate a variety of investment reports, including but not limited to:

  • Position Listing (Open Lot)
  • Realized Gain-Loss Report
  • Unrealized Gain-Loss Report
  • Closed Position Report
  • Security Position
  • Security Cost

These reports are generated at a master fund level but can be customized upon request.

Investor Accounting

Accurate and punctual investor reporting is critical for an advisor to attract and retain capital for the fund. The intricacies involved in providing investors with precise fee calculations and income-expense allocations can be quite complex, especially within the framework of hedge fund structures. Therefore, outsourcing this process is a prudent choice. We offer a fully-integrated fund accounting system programmed to automatically allocate income and expenses according to each individual investor's requirements, while aligning with the terms outlined in the fund's offering documents and generally accepted accounting principles.

We accommodate various needs, including:

  • Subscription Confirmation
  • Cash Receipt Confirmation
  • Redemption Acknowledgment
  • Subscription and Redemption Contract Notes
  • Monthly NAV Statements
  • Side Pocket Calculations
  • Multiple classes
  • Hurdle rates
  • Fee exceptions for individual investors

We readily provide customized statements, tailoring formatting, level of detail, or any other cosmetic aspects to meet the unique preferences of individual investors.

Reporting to Investment Managers

While the types of reports may vary based on the Investment Manager's preferences and the specific fund requirements, the following reports are typically generated:

  • Calculation of NAV (including full accruals of operating expenses, incentives, commissions, and other fees)
  • General Ledger Listing
  • Investor Summary Report
  • Balance Sheet
  • Income Statement
  • Trial Balance Report
  • Statement of Changes in Partner's Capital
  • Performance Table

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Equalization accounting

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Equalization accounting Historically, hedge funds typically provide for some form of performance-based compensation to the investment manager of the hedge fund (as set out above under section 3).   This has generally been a percentage of the increase in the gross assets over the prior high water mark.  For example, if the prior performance fee period had a net asset value of 100 and the following period's net asset value was 120 then the further performance fee for the period will be paid on the amount of that increase which is 20 and the high water mark for this following period would be set at 120. Thereafter if the net asset value fell below 120, no performance fee would be payable.  Although relatively simple to understand, there were certain situations where individual shareholders would suffer a fee not in line with performance and, consequently, the investment manager would receive either too large or  too small a fee relative to the individual shar...
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PERFORMANCE FEE EQUALISATION

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When setting up a fund, one of the first decisions a manager has to make is the choice of fund structure. Partnership structures are very common in US domestic funds because they offer tax transparency to investors. Accounting calculations for partnership structures are relatively straightforward. Individual capital accounts are maintained for each partner and performance fees are calculated at the capital account level per partner. Therefore, there are no equalization issues for managers to contend with.   In Europe, a combination of other fund structures is frequently used which requires calculations of per share/unit price.   In calculating performance fees in these structures, the overriding concern among managers has been in determining how to fairly reward the manager for positive performance while at the same time ensuring investors are treated equitably. Essentially, this is where the various forms of performance fee Equalisation come in.   One of t...
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Equity Swap - Accounting

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