White Papers, Surveys, Industry Resources and Recommended Reading

Geffen Advisors is pleased to provide links to useful materials which we have come across on the internet which we believe many visitors to our site might find useful.   Geffen Advisors does not necessarily agree with all of the information and conclusions presented in each linked item, but we think the overall value provided by each item makes it compelling for inclusion here.

General Interest
Launch Advisory
40 Act Alternatives
Hedge Fund Jurisdictions
Managed Accounts & Fund-of-Ones
Trading Documentation Negotiation
Industry Resources
Recommended Reading

General Interest:

Global Investor:
“Securities Finance Americas Guide 2017”
Published in June 2017, this guide provides an update on the state of the US securities finance business. David Geffen was interviewed for the “Hedge Funds” article, which covered hedge fund relationships with prime brokers.

Risk Magazine:
“Custody Risk America Awards 2014”
Published in May 2014, these awards cover 20 categories including many important to the hedge fund industry. David Geffen was one of four members of the judging panel.

Credit Suisse:
“The 2014 Credit Suisse Global Survey of Hedge Fund Investor Appetite and Activity”
Published in early 2014, this 75 page report was based on responses by nearly 500 institutional investors to Credit Suisse’s latest investor survey. This report provides a significant amount of useful data including investor predictions for hedge fund industry AUM growth.

Ernst & Young:
“Hedge Fund Survey 2012”
This 53 page guide includes a significant amount of useful information including survey results on many topics from fund managers and investors.  Sections of this document cover the following topics:  Investor demand and hedge fund selection, Headcount, infrastructure, outsourcing and costs, Eurozone considerations, Regulations and reporting, Compensation structure, and Future landscape.

Ernst & Young:
“Shadow accounting: The next step in the fund administrator relationship”
This February 2013 white paper challenges the traditional view that hedge funds should do full shadowing of their administrator. Given improvements in administrator technology and the fact that many administrators are now subjecting themselves to rigorous third party operational audits, I think E&Y’s ideas are valid and worthy of consideration.

Hedge Fund Operational Peer Group:
“Service Provider Selection and Co-Sourcing: The Keys to Establishing a Cost Efficient and Institutional Quality Hedge Fund Infrastructure”
The group that published this white paper in April 2013 includes hedge fund CFOs and COOs and service providers. Their goal was “to provide guidance for current and prospective hedge fund managers to effectively launch and grow their businesses.” Some articles in this white paper are better than others but this is a handy reference which includes excellent questions to ask some of your potential service providers. I highly recommend the piece by Lauren Teigland-Hunt on “Choosing Qualified Legal Counsel for a Hedge Fund’s Trading Documentation.”

“Infrastructure: from Cost to Benefit Hedge Funds 2.0”
This document was published in 2011 and makes the case that stronger infrastructure matters at hedge funds.   This document specifically covers the following subjects: Why stronger infrastructure matters, People, Processes and controls, and Technology.

“Asia-Pacific Hedge Fund Guide – 2012 Edition”
This comprehensive 120 page guide is targeted to hedge fund managers planning to launch a new fund or extend an existing US or European platform into Asia. It includes some very good pieces written by leading third party service providers spanning topics such as legal, compliance, recruiting, technology, administration and audit.

Sound Fund Advisors:
“Fund Governance Trends: 2013 Industry Data, Hot Topics & Recommended Best Practices”
This is an excellent white paper published in February 2014 and it is particularly recommended for the overview it provides of existing hedge fund governance practices and its excellent best practice recommendations.

Bank of America Merrill Lynch:
“The Multi-Prime Broker Environment: Overcoming the Challenges
and Reaping the Benefits”

This June 2008 white paper is dated but remains very relevant as it presents an excellent summary of the challenges and benefits hedge funds face when implementing multiple prime brokers. It also provides some recommendations regarding implementation options.

Launch Advisory:

The Bank of New York & Pershing Prime Services:
“A Guide to Establishing a Hedge Fund”
This 44 page document which was published in 2009 with the assistance of Moss-Adams LLP, Stark & Stark Attorneys At Law, EzeCastle Integration, and Sasserath & Zoraian, LLP covers many useful topics including: Legal and Tax Overview, Technology Considerations, Selecting Your Service Providers, Human Resources, and Capital Raising.

“Hedge Fund Start-Up Guide”
This 31 page document was published by Citibank in 2012 and covers Structure & Control, Hedge Fund Infrastructure, Service Providers, Organization and Marketing.  This guide would be very helpful to recently established hedge funds or individuals who are considering launching a hedge fund.

“Hedge Fund 3.0, A Flexible Operating Model for Building, Managing or Launching a State-of-the-Art Firm”
This 8 page document published in 2011 makes the case that many traditional hedge fund operating requirements can now be effectively outsourced to third parties.  The document discusses which particular services are applicable.

40 Act Alternatives:

Geffen Advisors:
“Retailization of Alt Assets: 40 Act, Act II”
Presented at the GAIM Ops conference in April 2014, the attached presentation covers ’40 Act alternatives market size, expected growth, typical strategies seen in that space, and the manner in which hedge funds enter this segment.

“Going Mainstream: Developments and Opportunities for Hedge Fund Managers in the ’40 Act Space”
Published in April 2014, Going Mainstream provides an excellent high level overview of the current landscape, players, and rationale for launching a ’40 Act alternatives product.

Goldman Sachs:
“Retail Liquid Alternatives: The Next Frontier”
Published in December 2013, this paper provides an excellent overview of the supply and demand characteristics of the U.S. liquid alternative market. Unlike most other reports on this market segment, this report includes appendices listing the largest liquid alts managers as well as the liquid alts funds gaining the most traction with investors.

“From alternatives to mainstream: Hedge funds’ changing role in the asset management industry”
Published in November 2013, this paper reviews Deutsche Bank’s 2012 Alternative Investment Survey. Survey respondents show that significant market losses, high correlations and unforeseen illiquidity issues have led retail investors and private wealth managers to increasingly seek liquid, non-correlated assets with lower portfolio volatility within a regulated investment framework, feeding the surge in retail alternatives.

“Introduction and Overview of 40 Act Liquid Alternatives Funds”
This April 2013 article from Citibank provides an excellent introduction and overview of 40 Act Liquid
Alternative Funds, including sections on structure, regulatory considerations, and key service providers.

“The Rise of Liquid Alternatives & the Changing Dynamics of Alternative Product Manufacturing and Distribution”
Published in May 2013, this Citibank whitepaper discusses the shift in institutional investor views including the emergence of a new “middle tier” liquid alternatives market catering to a retail audience.

“The Mainstreaming of Alternative Investments: Fueling the Next Wave of Growth in Asset Management”
Published in 2012, this comprehensive, multiyear global research effort lead by McKinsey highlights recent growth in alternative investments, changes in investor behavior, and discusses the rapid surge into retail alternatives.

“The Retail Alternatives Phenomenon”
Published in 2013, this whitepaper discusses the new wave of growth in alternative assets to retail markets.

Hedge Fund Jurisdictions:

Oliver Wyman:
“Domiciles of Alternative Investment Funds”
This study examines where alternative investment funds are domiciled, the reasons behind the choice of domicile and expected future trends.

“Hedge Fund Jurisdiction Comparison”
This July 2012 article offers a point-by-point Hedge Fund Jurisdiction Comparison between the Cayman Islands and British Virgin Islands.

Conyers Dill & Pearman:
“Comparison of Bermuda, Cayman Islands, British Virgin Islands and Mauritius Funds”
This May 2014 memorandum deals in broad terms with the requirements of each jurisdiction for the establishment and operation of a fund.

Managed Accounts & Fund-of-Ones:

AF Advisors:
“Managed accounts: The answer to the trend of institutionalization in hedge fund investing?”
This November 2012 white paper provides insights for institutional investors and financial institutions investing (or considering investing) in hedge funds. The paper seeks to bring a clear, balanced view on the various investment vehicles with a particular focus on managed accounts.

“The Fund-of-One: A Customized Solution for a Changing World”
This January 2013 article reviews how a custom-tailored ‘fund-of-one’ is a key part of building a solution for better hedge fund investing.

Trading Documentation Negotiation:

The Hedge Fund Law Report:
“Best Practices for Fund Managers When Entering Into ISDAs”
David Geffen was a contributor to the first two parts of this three part series published in January 2017. This series covered the following topics:
Part 1: Provides background on the various agreements that govern swaps, explains how the Dodd-Frank Act has introduced additional complications to the documentation process and offers advice on best practices for negotiating with dealers.
Part 2: Reviews the most commonly negotiated events of default and termination events in the trading agreements and offers suggestions for negotiating these provisions.
Part 3: Analyzes the key considerations for funds with respect to the collateral arrangements – the delivery of margin to mitigate counterparty risk – between the two parties.
Part 1 can be found via the link above. Parts 2 and 3 require a subscription and can be found at www.hflawreport.com.

Industry Resources:

Managed Funds Association (MFA):
MFA Industry Resources Page
MFA is the main source of information about the alternative investment industry for policy makers, regulators, investors and the media.

Alternative Investment Management Association:
AIMA Education Page
AIMA’s focus on education and sound practices has resulted in a substantial body of work for investors and practitioners alike.

California Hedge Fund Association:
CHFA Resource Center
California Hedge Fund Association is a non-profit, member based organization founded to foster the growth and development of the hedge fund community in California through advocacy of sound business practices, events, resources and educational programs.

Recommended Reading:

General Hedge Fund Reading:

“More Money Than God: Hedge Funds and the Making of a New Elite” by Sebastian Mallaby, 2011

“The Little Book of Hedge Funds (Little Books. Big Profits)” by Anthony Scaramucci, 2012

“Hedge Fund Investing: A Practical Approach to Understanding Investor Motivation, Manager Profits, and Fund Performance” by Kevin Mirabile, 2013

Early Hedge Fund Legends and Their Strategies

“Market Wizards” by Jack Schwager, 1989 (re-released 2012)

Recent Hedge Fund Legends and Their Strategies

“Hedge Fund Market Wizards: How Winning Traders Win” by Jack Schwager, 2012

Great Hedge Fund Successes of Recent Times

“The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History” by Gregory Zuckerman, 2010

“The Big Short: Inside the Doomsday Machine” by Michael Lewis, 2010

Notable Hedge Fund Failures of Recent Times

“When Genius Failed: The Rise and Fall of Long-Term Capital Management” by Roger Lowenstein, 2001

“Hedge Hogs: The Cowboy Traders Behind Wall Street’s Biggest Hedge Fund Disaster” by Barbara T. Dreyfuss, 2013