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2013 Business Expense Benchmark Survey
aggregated at a higher level, allowing for a consistent
comparison of costs across funds of varying profiles.
These functional categories, explored in the below
chart, include the following:
§§
Investment management – trading and research-
related functions (portfolio management, trading,
research, and research-related travel)
§§
Investment support – marketing and investor
relations, risk and compliance
§§
Operations and Technology – middle office support,
fund accounting, treasury and finance/collateral
management, fund-level legal expenses, and IT
§§
Business Management – real estate / facilities,
human resources, benefits, management company
audit/tax, and legal
The findings explored in this report are based on the
quantitative output of this hedge fund questionnaire.
By breaking out answers by various profile criteria,
the Business Advisory team was able to spot trends
and provide commentary around the industry’s
development with regard to fund and management
company expenses.
Data Analysis
Respondents were grouped into the following six
size bands:
§§
$100 million
§§
$500 million
§§
$1.5 billion
§§
$5 billion
§§
$10 billion
§§
Greater than $10 billion
Hedge Fund firms within these bands were then
consolidated in the analysis phase around the
terms Emerging, Institutional, and Franchise. The
implications of these growth phases are explored
throughout the paper. Similarities within and
differences across these categories form the basis of
our analysis.
The calculations that are used throughout this report
are centered around converting dollar responses into
basis points of assets under management (i.e. BPS
of AUM). Expense averages were derived for each
category via an equal-weighted method within each
size band. These average BPS of AUM were then
INVESTMENT SUPPORT
INVESTMENT MANAGEMENT
■
Portfolio Management
■
Research
■
Trading
OPERATIONS & TECHNOLOGY
OPERATIONS
■
Trade Support
■
Operations
■
Fund Governance
■
Fund Audit and
Tax Services
■
Fund Accounting
■
Legal Services
TECHNOLOGY
■
Network / Hardware
■
Software
■
Data
■
IT Support
MARKETING & INVESTOR RELATIONS
■
Fund Marketing
■
Public Relations
■
Brand Management
■
Marketing Materials
Production
■
Investor Relations
RISK & COMPLIANCE
■
Risk Management
■
Compliance
■
Regulatory Reporting
BUSINESS MANAGEMENT
■
Management Company Audit/Tax
■
Management Company Accounting
■
Legal Support
■
Human Resources
■
Benefits
■
Insurance
■
Real Estate
■
Commercial Banking
■
Vendor Management
■
Travel Services
Chart 1: Hedge Fund Functional Architecture