Advent adds another hedge fund to its Geneva client base

NEW YORK -- DE Shaw, a $5 billion hedge fund based in New York, has chosen Advent Software’s investment accounting system, Geneva, to enhance its back-office functions.

The fund expects implementation of Geneva to enable it to streamline its back-office technology, the management of swaps and other complex instruments, and allow it more timely and flexible views across its portfolios.

Advent now has 22 global hedge funds with $60 billion in cumulative assets under management using the Geneva system. According to Matt Harrell, head of Geneva sales for hedge funds and prime brokers at Advent, most of the company’s hedge fund clients cited the same factors -- the need for enhanced reporting capabilities being the chief driver -- in their decisions to adopt the system, "The hedge funds we deal with are looking for more flexibility, timeliness and accuracy in their reports," Harrell says. "They want more control over the types of reports they’re generating, and also the ability to get them to their general partner’s desk at 5pm each day."

Pressure for more timely reports externally to investors -- and internally to traders -- also prompts certain funds to streamline their accounting, according to Harrell. "Some large hedge funds are challenged to close their books in a timely manner at the end of every month," he explains. "There are also internal challenges involving getting back-office reports out to the trading desks in a timely manner. In a lot of traditional systems, because it’s a batch process, the back-office operations group has to wait until the end of day to run those reports. It causes a lot of friction between the front office and the back office."

Harrell also cites the influx of institutional money into many hedge funds as another reason these firms are implementing Advent’s accounting system: "The benefit of institutional dollars is access to a lot of capital that tends to be stickier. The challenge is the institutions tend to be more demanding in terms of their reporting requirements," he says.

Harrell says that while Geneva currently targets primarily large funds, Advent has begun eyeing smaller funds -- those with less than $1.5 billion in assets under management -- and adjusting the system accordingly to address their needs. "We’re taking the product from an early adopter phase to a mainstream model," he says. "In the past, Geneva was a product that could be used only by very large hedge funds, but of the last 12 deals we’ve done, six of those have been below $1.5 billion."

To that end, Advent is now considering developing an ASP version of Geneva to appeal to smaller funds without the IT maintenance resources of their larger brethren, and has already begun offering the system at a lower price for hedge funds with assets in the range of $500 million.