NEW YORK (HedgeWorld.com) – Taking a closer look at the myriad of accounting systems being bought by hedge funds and hedge fund administrators and service providers, CarbonBased Consulting’s recentsurvey shows the growing number of integrated systems being sold.
A comparison matrix totaling 138 pages, CarbonBased’s research comes from surveying 18 vendors of different partnership accounting, general ledger and integrated partnership accounting software suites. Providers are compared on numerous criteria including investments handled, portfolio management tools and partnership accounting capabilities.
The emerging trend among financial software companies is the introduction of “integrated” software that bundles both partnership accounting and general ledger tasks, according to Brian Shapiro, president and chief executive of CarbonBased. Integrated systems could also be more costly to hedge fund mangers priced on average at US$200,000, whereas a general ledger might only cost around US$115,000.
Providers of integrated software packages tend to dominate the matrix. They include: Captools Co., Customized Accounting Solutions, Eagle Investment Systems, Financial Technologies, FutureFirst Software, Integrated Business Systems, Pacific Fund Systems, SS&C Technologies and SunGard Investment Management Systems.
According to Mr. Shapiro, CarbonBased’s clients, the lion’s share of which are hedge funds, have seen some inherent shortcomings of the accounting packages available. In general, problems relating to allocation of capital, reconciliation, straight-through-processing capabilities and wash sale reporting are still rampant, he said.
The leading software providers such as SS&C and SunGard are popular but are still not as user-friendly as some hedge fund clients would like. “The majority of these platforms still, unfortunately, are very labor intensive,” Mr. Shapiro said. Autocorrect features and audit trails are still not where they should be, according to CarbonBased.
Much of what has ruled to date is “hasty development strategy” on the part of vendors looking to capitalize on the growing hedge fund market, said Mr. Shapiro. Another area of general weakness is in the area of reporting, which needs to be integrated with web-reporting tools in order to allow hedge funds and funds of funds to share information more easily with investors.
CarbonBased Consulting worked with hedge funds in gathering information on hedge fund accounting systems. Input was gathered from: Josh Nadell, Elliott Management; Bob Jones and Elani Walden, K2 Advisors; Roz Levine, Georgica Advisors LLC and Peter Testaverde, Goldstein, Golub Kessler & Co. PC.
