Participants in hedge funds-management company, Financial Management

The Manager or Management Company

The firm sponsoring the Fund could often structure it as a management company. Its primary responsibility is to determine investment strategies, operating decisions and management fee charge and collection. The management fee usually ranges between 1-3 percent on assets managed and collected regularly.

311_management compony.png

Figure: Traditional Hedge Fund Structure

 

Board of Directors

Board of Directors as in any form of organization, is responsible for monitoring, supervising and appointment of key personnel in the management of the organization. Often the Board of Directors appoints an executive committee to review the performance of Funds over a period of time. Usually, it appoints custodians, transfer agents, auditors and accountants, legal and tax advisors, reviews the performance of Funds and considers proposals of the management team.

Investment Advisor plays a limited role by giving professional advice on the Fund investments to the Hedge Funds as well as investors. The advisor tries to provide his services, which need to align with the Fund objectives, policies, and parameters as explained in the prospectus of the Fund. For Hedge Funds, an advisor could be an employee of the firm itself or an independent person, and usually receives a fixed fee for his services.

An Administrator

An Administration has a primary task to play, that is to maintain records, bookkeeping and independently verifying asset value of the Fund. During the time of redemption or transfer of interest among investors, an administrator calculates the value of the entire portfolio of Fund or the net asset value of shares that are not traded. The Fund usually charges an administration fee of 0.5 percent to 0.75 percent on the Fund net asset value per year.

Distributors are the sales force appointed for distribution of Fund shares to potential clients for investment. The expenditure the sales force incurs is considered marketing and distribution expenses of the Fund, and it varies in the range of 2 percent to 5 percent of the Fund commitment.

Registrar/Transfer Agent

Registrar/Transfer Agent processes subscriptions and redemptions, and maintains the register of shareholders.

The Custodian

The Custodian performs the activities of safekeeping of assets; clearing, settling, and recording confirmation of sale; transfer of securities on sale or purchase; and monitoring corporate actions.

Executive Brokers

The Executive brokers provide direct access to market by executing orders placed by Hedge Funds for purchase and sale of underlying securities.

The Prime broker provides access to stock loan and financing, as well as a host of value added services.

An Auditor looks whether the Hedge Fund complies with accounting procedures and practices that need to be followed for preparation of financial accounts.

Legal Advisors and Tax consultants provide suggestions related to structure and hurdles on tax and legal matters such as compliance with domestic regulations, holding of securities, tax related to gains, etc.

 

Posted Date: 9/11/2012 2:11:39 AM | Location : United States







Related Discussions:- Participants in hedge funds-management company, Assignment Help, Ask Question on Participants in hedge funds-management company, Get Answer, Expert's Help, Participants in hedge funds-management company Discussions

Write discussion on Participants in hedge funds-management company
Your posts are moderated
Related Questions
Your company is preparing to borrow $1,750,000 on a 3-year, 10%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will sho

You have just had your 30 th birthday. You have two children. One will go to college 12 years from now and require four yearly payments for college expenses of RM11,000, RM12,000

you are checking a financial analyst''s recommendation. the analyst projects a company''s stock price to be P72 per share in 3 years. the most recent annual dividend was P1.68 per

Air Manchester (AM) is a new airplane manufacturer. It is considering investing in a software package, e.g. SAS, which would make its daily operations more efficient

These securities aid in unpacking the cash flows from a pass-through. The most uncomplicated stripped mortgage-backed securities are the PO-IO-security. Unlike a

The buy down loan is similar to the PAM; however, it is the seller of the property and not the buyer/borrower who places cash in a segregated account so that additional

Loans from the financial institutions: Financial institutions such as the commercial bank life insurance corporation, industries financial development corporation bank of the

Bond are formal certificates issued by the companies or government agencies acknowledging the indebtedness. To the investors, they are proofs of investment. In th

Discuss risk from the perspective of the Capital Asset Pricing Model (CAPM). The Capital Asset Pricing Model or CAPM be able to be used to compute the appropriate required rate

type of assets for ppt from t.y.bom com student in commerce department in financial management