Strategies
Hedge fund operations built for daily NAV, complex fees and multiple primes
Open-ended funds live on short cycles. Fundtec runs the trade, cash, NAV and investor workflows that hedge fund managers and their administrators depend on every dealing day.
In one minute
Hedge fund operations support is the daily and monthly work that turns trades, prices and investor flows into an accurate NAV and investor record. Fundtec provides it for hedge fund managers and administrators: NAV production and shadow NAV, equalization and series accounting, performance fees with high-water marks, multi-prime-broker reconciliation and OTC lifecycle support, on Tychi or on the client’s own systems.
Managers running this strategy who want administration and operations that already understand its accounting, valuation and investor-reporting demands.
A 30-minute scoping call, then a written plan: scope, the transition timeline and indicative pricing. No generic proposal.
What makes hedge fund operations different
A hedge fund is valued, dealt and reported on a short, fixed cycle. Investors subscribe and redeem at the NAV, so every price, accrual and fee must be right before the dealing day closes. Portfolios often span listed equities, fixed income, futures, options, swaps and FX, held across more than one prime broker and custodian.
The investor side adds its own complexity. Incentive fees are charged per investor or per series, subject to a high-water mark, and may crystallize monthly, quarterly or on redemption. Master-feeder structures split one portfolio across onshore and offshore vehicles. Fundtec’s role is to make this machinery repeatable: one book of record, one break log, one fee model that the administrator, auditor and COO can each trace.
Hedge fund workflows we run every cycle
Daily and monthly NAV
Daily estimated NAV and P&L for the portfolio team, and a monthly final NAV pack with trial balance, fee schedule, pricing sign-off and investor allocation.
Equalization and series accounting
Per-investor equalization credits and debits, or series accounting with month-end roll-ups into the lead series, depending on what the offering memorandum specifies.
Side pockets
Segregation of illiquid positions into side pockets, with separate investor participation, valuation and fee treatment until the asset is realized.
Performance fees and crystallization
Incentive fee accruals against each investor’s high-water mark, hurdle where applicable, and crystallization at period end or on redemption.
Multi-prime-broker reconciliation
Daily cash, position and P&L reconciliation across every prime broker and custodian, with breaks aged, owned and escalated through a documented matrix.
OTC derivatives and ISDA
Confirmation matching, resets, cash flows and collateral calls under each ISDA and CSA, plus mark verification against counterparty valuations.
Master-feeder allocations
Allocation of master-fund income, expenses and P&L to feeders by ownership, with feeder-level fees and expenses booked separately in a master-feeder structure.
How Fundtec supports hedge funds across all three offerings
Each column can be engaged on its own. Most hedge fund clients combine a use case with middle-office coverage and managed investment operations.
Use cases
- Hire a Fund AdministratorFull administration for open-ended funds, including dealing, NAV, equalization and investor reporting.
- Switch Your AdministratorA controlled migration of investor registers, fee histories and high-water marks from an incumbent administrator.
- IBOR/ABOR SetupAn intraday investment book of record for the trading desk alongside the accounting book used for NAV.
- Launch a FundOperational setup for a new hedge fund, from share classes and fee terms to prime broker onboarding.
Middle office
- Trade OperationsTrade capture, affirmation and settlement across primes, executing brokers and OTC counterparties.
- Treasury OperationsMargin, collateral, financing and cash movements across prime brokerage and ISDA relationships.
- Valuations & PricingIndependent price verification for listed, OTC and hard-to-value positions under an approved pricing policy.
- Middle OfficeA single middle-office hub that keeps positions, P&L and cash aligned before they reach the NAV.
Managed investment operations
- Shadow AccountingAn independent shadow NAV that checks the administrator’s fees, accruals and investor allocations each period.
- ReconciliationA dedicated reconciliation pod covering every prime broker, custodian and counterparty statement daily.
- Investor ServicesSubscription and redemption processing, investor queries and statements handled by a named team.
Hedge fund operational calendar
A typical cadence for a monthly-dealing fund. Actual timings follow the offering documents and agreed SLAs.
| Cadence | Activity | Output |
|---|---|---|
| Daily (T+1) | Trade capture, cash and position reconciliation across all primes | Break log with owner, age and escalation status |
| Daily | Estimated P&L and NAV | Flash P&L by strategy, book and counterparty |
| Daily / on call | Margin and collateral review | Collateral movement log and ISDA call record |
| Monthly | Final NAV, fee accruals, equalization or series roll-up | NAV pack, investor allocation, fee schedule |
| Monthly or quarterly | Performance fee crystallization | Crystallization report by investor or series |
| Each dealing day | Subscriptions, redemptions and transfers | Contract notes and updated investor register |
| Annual | Audit support and financial statements | Audit PBC schedules, reconciled trial balance |
How a monthly hedge fund NAV close runs
Lock trades and positions
Confirm all trades are captured and every prime, custodian and OTC counterparty reconciles to the book of record.
Price the book
Apply the pricing hierarchy, investigate stale or outlier prices, and document overrides for manager sign-off.
Accrue income and expenses
Book interest, dividends, financing, management fees and fund expenses, and reconcile accruals to source statements.
Calculate performance fees
Run incentive fees by investor or series against high-water marks, then apply equalization or series roll-ups.
Review and release
Four-eyes review of the NAV pack, variance commentary, then release to the administrator, manager and investors.
Engagement model
How an engagement is structured
Economics aligned to your growth. Scope, cadence and pricing are confirmed jointly in the first phase.
- 01 · Weeks 1–4
Onboarding & design
A phase-linked fee covers process mapping, the operational handbook, systems access and the SLA framework — before any handover.
- Target operating model
- Operational handbook
- SLAs agreed jointly
- 02 · From the parallel run
Monthly base fee
Your dedicated team, pod manager oversight and the governance cadence — daily huddle, weekly review, monthly service review, QBR.
- Named PM → SME
- Trained backup for every role
- Governance included
- 03 · As you grow
Scales with AUM
AUM-linked tiers and pre-agreed triggers for new mandates or counterparties — so growth never means renegotiating the contract.
- Transparent triggers
- No renegotiation
- Quarterly pricing review
Every engagement starts with a scoping call — no obligation, no generic proposal.
Request an indicative proposalQuestions
Common questions about Hedge Funds
Didn’t find your question? Put it to a specialist directly.
Ask a specialistFrequently asked questions
Does Fundtec calculate hedge fund performance fees with high-water marks?
Yes. Fundtec calculates incentive fees per investor or per series, tracks each high-water mark, applies any hurdle and crystallizes on the dates the offering documents specify, including on redemption. Every calculation is reproducible from the fee terms and period returns, so the administrator, auditor and manager can trace the same number.
Should a hedge fund use equalization or series accounting?
The choice sits in the offering documents, not with the operator. Equalization keeps one share class and adjusts each investor through credits and debits. Series accounting issues a new series per subscription date and rolls series into the lead series when fees crystallize. Fundtec supports both methods and can migrate historical records between them.
Can you reconcile positions across several prime brokers?
Yes. Multi-prime reconciliation is a core daily task. Fundtec reconciles cash, positions and P&L from each prime broker, custodian and OTC counterparty to the book of record, logs every break with an owner and age, and escalates unresolved items through an agreed matrix before they affect the NAV.
How do you handle side pockets?
Side-pocketed assets are moved into a separate class or account at a designated value, with participation limited to investors in the fund at the time. Fundtec tracks side-pocket capital separately, values it under the fund’s policy, excludes it from redemptions and releases proceeds to participating investors when the asset is realized.
Do you support master-feeder hedge fund structures?
Yes. Fundtec books the master fund’s trading activity once, allocates income, expenses and P&L to each feeder by ownership, and then runs feeder-level fees, expenses and investor accounting separately. Onshore and offshore feeders can sit on different fee terms and reporting calendars without duplicating the portfolio book.
Can Fundtec work alongside our existing administrator?
Yes. Many hedge fund managers keep their administrator and add Fundtec for shadow accounting, reconciliation or middle-office coverage. Our pod runs in the manager’s environment, rebuilds the NAV independently and flags differences before sign-off. Data stays in your systems, with access granted and revoked by you.
What drives the cost of hedge fund operations support?
Cost depends mainly on dealing frequency, number of share classes or series, instrument mix, number of prime brokers and counterparties, and investor count. OTC derivatives and daily NAV add effort. Managed investment operations pricing is aligned to AUM growth, so new mandates and counterparties can be absorbed without renegotiating the whole engagement.
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