More and more hedge funds are turning to outsourced solutions to enhance their business model. Prime Services’ Mark Aldoroty explores the top benefits of outsourcing and key considerations for fund managers.
Typical areas of outsourcing for hedge funds range from hiring an outsourced CFO or COO, to regulatory and compliance support functions, to outsourced trading. A hedge fund has the ability to create a support model that’s specific to their size, maturity, and needs.
The top reasons most hedge funds consider an outsourced solution are efficiency and cost reduction. Freeing up resources at the fund allows for time to focus on strengthening their strategies, maintaining growth, and raising money, if that’s their goal.
Hedge funds should consider the size of their fund. Are they at the size when bringing in additional operational support will help free up resources, or are they large enough that an in-house, dedicated COO will be more of a benefit to the firm? Also, with regard to size, can a smaller hedge fund benefit from gaining different perspectives by working with a service provider to see a wider cross-section of the industry?
Some of the benefits of outsourcing include eliminating fixed costs, like staffing, technology and office space. For example, working with an outsourced trading function like Pershing’s gives hedge funds access to trading desks with deep, product-specific knowledge and vast industry experience while reducing costs.
One of the benefits of working with our prime services team is access to an array of additional products and capabilities across the BNY Mellon enterprise. Contact the Prime Services team at Pershing to learn more about the ways in which we work with hedge funds to solve for their business challenges by providing insights into the alternative investment industry.
Mark Aldoroty is a Managing Director for BNY Mellon | Pershing. He leads Pershing’s Prime Services and Collateral Funding and Trading teams. Prior to this role, Mark led the Prime Services Sales and Relationship Management teams.