Administrators look to independent valuation of complex securities to get a competitive edge
W hen it comes to landing hedge fund clients, competition among administrators can be fierce these days. Building a better mousetrap to value exotic and illiquid securities is one way to stand out. At least that's the experience of Fulcrum, a small Bermuda-based administrator that managed to snag business from the competition by its ability to value insurance-linked derivatives - and to do so quickly.
"What differentiated us was our ability to effectively use technology to create models for these types of instruments that don't fall into any standard categories of options or equities," says Tim Thornton, a senior manager at Fulcrum.
According to Fulcrum, superior modeling gave it an edge: Whereas it took the firm's previous administrator up to nine weeks to deliver a net asset value (NAV) calculation, Fulcrum can do so within seven to nine...