David Young, president of Gemini Hedge Fund Services, explains the thinking behind distributing the administrator’s services on a more broad base
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Why is Gemini Hedge Fund Services being lunched and what gap are you hoping to fill in the fund administration market?
Gemini Hedge Fund Services has a long history of administration experience, much of this has been centered around alternative strategies inside a mutual fund structure. The hedge fund administration unit has existed for more than a decade, and we are now focusing on distributing these services on a more broad base to alternative managers.
What is unique about Gemini Hedge is our ability to leverage the expertise of a true daily net asset value administrator. For a long time, we have seen hedge funds assimilating to a mutual fund experience, and that’s what we are taking advantage of; the daily process that exists in a mutual fund administrator such as Gemini. We have the expertise that hedge fund managers are looking to work with. The technology that we are able to provide to managers allows them to tie together order management, their prime broker and their administration, all in one platform.
With Gemini Hedge, they are able to see in real time profit and loss and risk, and that is tied to the underlying books and records of the funds, which is unique from a fund administration viewpoint. I think the other thing that Gemini Hedge has to offer is the fact that we focus on a lot of different areas of distribution for a fund manager. We have the ability to build a mutual fund. Gemini Hedge is one of the only administrators that has key account managers that work to introduce our fund managers to various platforms to make sure that the investors have the opportunity to work with our fund managers.
Why are more hedge funds adopting mutual fund administration?
This is happening because of investor demand. Investors would like to see an environment more like that of a mutual fund, with more frequent liquidity, more transparent reporting, as well as the desire to see more attributes of the portfolio including the true NAV of the fund.
With consolidation increasingly commonplace, what can smaller fund administrators do to stand out from the competition?
Smaller fund administrators need to have the ability to provide enhanced services and reporting for managers. Not all managers want the ability to provide data to their investors as frequently as in a mutual fund environment, but for those that do, the ability to provide that enhanced, transparent reporting is an area that a smaller administrator can try to focus on.
Do you think that the recent spate of mergers and acquisitions have been positive for the industry?
Yes, because it opens up more areas of the market for mid-tier administrators such as Gemini Hedge. We provide an administration offering that is the next generation of service. With consolidation, there is a better opportunity for Gemini Hedge to be included in the proposal process with alternative managers.
Will Gemini be looking to do business in Europe?
I certainly think that’s an area of growth for us. I’m not sure if that will happen this year, but I think that is something we will explore in the future
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