Why do Hedge Funds Use MSPs?

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16th October 2022

Amidst a pandemic stricken economy and the resultant fear of the unknown, a steady increase in demand for hedge funds is imminent. 2021 has seen industry AUM scaling to billions and trillions as investors continue to direct money into the sector. Also, the survey depicts high investor appetite for hedge funds in the first half of the year.

Ostensibly, as a business investment grows, its operational requirements will progressively change. It can be a daunting experience for any hedge fund manager. Allowing an MSP some responsibilities can help curb control costs, increase efficiency and scalability. Only the most efficient and robust MSPs will serve you with:

  • Ensuring quantitative and qualitative due diligence hedge fund requirements are met.
  • Keeping operational risks in check.
  • An apt outsourcing scheme which delivers operational professionalism.
  • Ensures partners meet the hedge fund due diligence standards.

Below are benefits that come with incorporating managed service providers to a hedge fund. Let’s dive in!

  1. Cost savings A major incentive in partnering with a reputable MSP is its cost-effective models. A service level agreement is customized to the company’s precise requirements for correct feasibility and optimal production.

  2. Scalability As hedge fund managers examine their operating expenses, the unknown, administration, derivatives and other scalability are vital. As companies grow, there are looming hurdles which are always in competition with available resources.

A reputable MSP will effectively handle these growth spurts; a good example is IT and accounting matters.

  1. Focus on Core Business A flourishing business has an expansive scope of responsibilities which do not align with their original roles. It becomes cumbersome for employees to focus on their primary tasks. For hedge fund managers to ensure the smooth running of operations, a hedge fund ought to engage the services of professionals.

  2. Improved Vendor Management A managed services provider can cohere with vendors in place of a hedge fund company. It ensures all business-related problems are adequately resolved. The MSP will serve as the focal point for third parties, direct issues to appropriate vendors and eventually see the process through.

Vendor coordination can be overwhelming for employees. Therefore, outsourcing may be subtle for streamlining hedge fund operations.

We hope that this roundup has helped enlighten you on hedge fund need for MSPs.