Administrators look to independent
valuation of complex securities to get a competitive
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...