Middle and back office services

Whether starting out or well established, it is important to keep track of cash flow and budgeting at both manager and fund levels.

Both emerging or first time managers and well established asset management houses need to stay on top of their cashflow forecasts. Be it for regulatory and ICAAP reasons or for basic income and outgoings projections. These budgets need to be maintained at both the level of the manager as well as each fund.

MJ Hudson’s team support our clients by either creating new financial models or reviewing and managing existing ones. We leverage our expertise and deep understanding of investment structures and waterfall calculations to advise clients on their forecasts and ensure models capture all likely cashflow impacts. This assists clients to navigate the various phases of the investment life cycle and ensure capital adequacy requirements are continuously met. Our experienced accounting team can also access and manage bank accounts to help process payments and ensure due processes are maintained and all outgoings and income is properly tracked and registered with a sufficient audit trail.

Enabling asset managers to have tighter control of their expenses and easier business planning.

Full day-to-day oversight and management of all service providers acting as your own internal COO function and middle office team.

In addition to strict regulatory obligations investors and regulators alike are pushing managers to increase their operational infrastructure and minimise operational risk.

The regulatory obligations enforce managers to carry out annual due diligence assessments on all service providers to the fund structure. Investors, especially institutions, are therefore also carrying out increasing levels of due diligence on the operational infrastructure at the level of funds and fund management teams. This includes analysis of the size of the team, provision of various policies and processes such as compliance, valuation, risk management and administration. As our clients grow they often find it difficult to grow their middle office teams at the same pace. This all causes bottlenecks and stifles growth as adding significant headcount within management teams for middle and back office personnel is time consuming and often an afterthought.

MJ Hudson’s AIFM and ManCo teams take on the operational responsibility on behalf of our clients. We also offer this service as an outsourced solution to act as an immediate and variable add-on for existing middle office teams. Our operational teams often face off against institutional investors to ensure they have confidence that the structures will be managed within the regulatory framework and that there are sufficient levels of professionals executing the day-to-day functions of the fund structure.

MJ Hudson will deliver a full middle office operational infrastructure ensuring our clients have more time to focus on investment performance and reducing the risk of operational failures/breaches.

One off or annual reviews of operational infrastructure to ensure compliance and allow for better due diligence results from investors.

As investors carry out increasing levels of due diligence it is important to ensure manager and fund policies and procedures are up to date and in line with industry standards.

MJ Hudson’s team can leverage our deep experience acting as AIFM and ManCo for a wide range of funds to help our clients ensure their policies and procedures surrounding fund governance are up to date and also practical. This input can assist greatly with fund raising exercises as we aim to ensure that these policies will ‘tick the boxes’ of ever increasing investor due diligence request. MJ Hudson can also assist with the implementation of such policies where required assisting managers to grow more quickly.

Delivering best of class written infrastructure for fund managers which is presentable to investors or regulators alike.

Generate and analyse detailed risk reports at fund and portfolio levels presentable to the fund/GP board.

Monitoring risk is a matter of necessity. All investment returns involve some degree of risk; however, the reverse is not necessarily true. It is important to have a solid understanding of the key risks of your fund and portfolio, including a detailed mitigation plan, in order to understand the impact potential risks may have on the manager, fund and its investors.

MJ Hudson team takes a bespoke approach to risk management, recognising the importance of tailoring your risk management policy to the fund profile and investment strategy. We will help you set and monitor the risk appetite for the fund and provide a plug-in infrastructure that will help you manage them. Where appropriate MJ Hudson utilises top class technology solutions directly integrated into fund administrator and/or prime broker systems to take an independent portfolio feed on a daily basis.

The risk management team can run from daily to six monthly compliance checks against regulatory rules and prospectus mandates as well as NAV verification checks. For liquid funds this includes the full range of derivatives monitoring including global exposure, counterparty exposure and leverage, including both VaR and commitment approach.

Monitor, reconcile and verify accounting information being presented by fund administrators.

Managers can spend a lot of time checking accounts being generated by their third party fund administrators. This is time consuming and often a very manual process and requires qualified accountants on the management team which aren’t always readily available. Systems to assist with this can also be prohibitively expensive, especially for smaller managers.

MJ Hudson’s fund accounting team can offer a full back to back shadow accounting function. We seek to integrate accounting systems with administrators to ensure ongoing reconciliation of all fund accounting data. With periodic checks carried out on the fund accounts and amendments fully managed between MJ Hudson and administrative teams this saves time for our clients. Having an ongoing shadow accounting function also reduces operational risk exposure and gives an additional layer of comfort for investors.

Our team will manage the shadow accounting function in the background alongside your fund administrators. We will produce errors, breaches and resolution reports on a periodic basis.