Fast-forward to 2012, and the investment environment is even more complex. The hedge fund industry has entered an era of increased regulation, compliance, and investor prudence, all amid constantly evolving investment strategies and instruments. This creates numerous challenges in terms of the costs and resources involved. It is with those constraints in mind that Advent has worked on turning Geneva from a high-performance, profit and loss generating system to a firm-wide middle to back office portfolio management solution, providing full investment management, accounting books, and operational support.
This ability to meet the market’s rapidly changing needs has allowed Geneva to become an industry-leading, real-time global investment management and accounting platform, the leader in portfolio management for firms of all sizes. Geneva has over 255 clients worldwide including hedge funds, asset managers, family offices, fund administrators, and prime brokers, and offers them comprehensive instrument coverage, full financial general ledger, and industry-standard integration tools to enable firms to manage complex investment vehicles, multiple investment strategies, and tiered fund structures.
Not just an accounting system
Advent says Geneva is the only portfolio management solution designed to meet the demanding, real-time operational and decision support requirements of large, global hedge funds.
“Our enormous success in the fund administration market has left an impression with many that we were always an accounting system and that’s really not the case”, stresses Tom Zdon, Advent’s Vice President Solution Consulting and Business Development. “From day one Geneva was designed to be a best of breed, scalable portfolio management system with zero down time and global access – which led fund administrators to ask us to build a fund accounting module,” he says. “But, in fact, if I were to go to any hedge fund in London, I’d find that few use Geneva’s fund accounting module – but all focus on the ease of our middle office and portfolio management tools and our ability to generate accurate cash accruals across anincredibly complex set of investments.”
Zdon attributes Geneva’s success to market momentum and the longevity of its presence in the hedge fund community. “We’ve had enormous success,” he says. “Our approach has been very cautious but also combined with real passion.”
Versatility, flexibility and adaptability are Geneva’s winning triad. The system is adapted to each client and region’s specific needs. Traditionally, Geneva has been the number one selling hedge fund platform in the US. As Advent geared up to approach the European and Asian markets a couple of years ago, Zdon says the company realised “they couldn’t just drop the US-based Geneva system into European regional markets.” Instead, Advent had to build from the ground up the capabilities that different regions required.
Another big reason for Geneva’s success is that it is the only vendor for the three key pillars of the hedge fund market – the prime broker, fund administrator and hedge fund managers. “That allows us to bring operational efficiencies to bear whether it’s in understanding margins and financing costs, or creating true live real-time P&L, or easily reconciling across the triad. Having the same platform in each leg means more collaborative, accurate, and faster workflows for our clients,” Zdon says.
A scalable solution
In the UK and Europe, Advent’s technology supports five of the top 20 hedge funds. Three of those hedge fund groups have been added in the past two years. Advent’s solutions appeal to hedge funds with a higher degree of operational complexity, a broad asset class mix and multiple strategies. The solutions Advent provides are also attracting a growing number of hedge fund start-ups.
Among the key wins with new hedge fund groups is Carrhae Capital, a global emerging market long/short equity start-up which selected Geneva because it provided the footprint on which they could grow their business. Advent was able to get the system up and running in a three month start-to-finish implementation.
“Carrhae were really able to get a hedge fund out of a box platform really rapidly,” says Zdon. “They knew that with Geneva they were getting a system that would enable not only a platform for the securities that they’re trading today, but that would also take them where they wanted to go two or three years down the road without any of the limitations of some of our competitors’ systems.”
Advent’s collaboration with Carrhae illustrates an interesting new trend in the industry, with smaller hedge fund launches increasingly demanding technology more usually employed by bigger, more institutional-type funds. To answer this growing need, Advent has designed two programmes specifically for start-ups and growing hedge funds. One is Geneva Essentials – a low-cost solution that offers the Geneva investment platform, simplified reconciliation to third-party data sources, easy integration to prime brokers, a dedicated relationship manager and system upgrades. The other is Geneva QuickStart – a fixed-price, fixed scope implementation package that enables firms to be fully operational in a matter of weeks, for a fraction of the standard implementation cost. It is a cost-efficient option, designed for scalability, which allows funds to grow their asset and client base without having to grow their staff or technology infrastructure.
“We have come up with models for the start-up firms that need to exhibit the attributes of a mature shop to investors out of the gate and we include upgrades and maintenance in our price,” says Zdon. “Charging clients more to get a new version of a solution is not part of our model. When a business signs with Advent it is given the product and every upgrade as it’s released. We try to be aligned with our clients – the more assets they can place on the system – the better we all do.”
This flexible approach explains Geneva’s enviably high retention rate. It has also gained some market share from mergers and acquisitions among asset managers. Over the past year, Advent encountered several situations where after corporate activity the combined firm had two portfolio management systems. In short, managers had to choose. “In each and every case, the product that was selected for the new combined entity was Geneva rather than a competitor’s product”, Zdon says.
A user-friendly system
Geneva features real-time, drill-through reporting that allows users to delve into reports and analyse the underlying positions and the accounting treatment of them. Everyone from operations staff to portfolio managers can move easily throughout the system and access the exact information they need when they need it. “What Geneva really offers that others really don’t is the real-time capability of the system,” says Zdon. “There are no batch processes that have to be run to enable accurate information. You can run any report or dashboard in real time throughout the day – there is no wait for. We have an efficient way of entering information into the system so a user never has to backdate it out or repost it to get accurate results. It is simple to mend the results in the past and the system is smart enough to know how to do this.”
Advent has worked on facilitating every step of the portfolio management process with Geneva by creating very simple ways to get information into the system, whether for pre-built integration to Bloomberg, Reuters, IDC or SuperDerivatives, or even via Excel sheet integration. Some clients have told Advent that this simple integration was worth the conversion – as the system is only as good as the data in it.
“We’ve also spent an enormous amount of time building out technology that puts the power of reporting and exception-based alerting into the hands of the middle office and operations staff. You can create any view of P&L on the fly – knowing it will always be accurate – and change those views into reports with one click. The cultural change in a firm that adopts Geneva is palpable”, says Zdon.
He adds: “We find that trust and collaboration increases exponentially between ops and the front office with people adopting broader job descriptions and working together more harmoniously – when your operations guy can provide complex P&L analysis in minutes instead of days without IT involvement – it changes how you operate.”
The system also includes a full report writer and dashboard technology that enables managers to construct any view of the P&L. Managers can aggregate this at any level, manage their portfolio and not require additional technical resources to do so.
A rapid release cycle
Advent has implemented four updates to Geneva over the past year. The latest version is Geneva 8.5, which Advent says is one of the only solutions available that provides portfolio through fund and investor-level accounting on a single platform and extends the product’s portfolio management functionality into the front and middle-office. It thus meets the needs of new market segments, including family offices, private equity firms and funds of funds. Geneva also boasts several new functions. Among them: real-time P&L and exposure views; simplified tools to easily build, customise, and deploy dashboards and reports; and private equity support, including capital commitment and call processing, waterfall calculations and capital distributions, which enable firms to increase their diversification of funds. There is also n-Tier fund structure support, to make it easier to set up and manage complicated, multi-tiered fund structures. As well, Geneva offers fully integrated investment and investor accounting support on a single platform, which lowers total cost of ownership by reducing the operational overhead typically required to maintain and integrate disparate systems.
Given changing business needsand updates to Geneva, Advent carries out regular operational reviews with clients. “I think in the past year we’ve done 30 to 40 operational reviews with various funds in Asia and in the UK,” says Zdon. “We just did an operational review with SISU Capital. SISU provides their clients with a world class platform and said that the ability to easily get data in and out of the system was a key benefit, whether using quick import to ensure completeness of data, or bookmarks to access information rapidly. As their COO told us – it’s not enough to tell regulators what you’re doing – you need to prove it. Geneva helps them do that.”
Geneva is currently the only system that can have a full middle office to investor level reporting solution inclusive of investor look through reporting. In the 9.0 release, Advent is expanding the asset class coverage to include additional features such as funds of funds, funds of hedge funds, and private equity structuring as well as investment management. Integration to Syncova and Tamale provides an end to end workbench where analyst data, ISDA agreements, financing costs, and the full investment lifecycle can be represented on a single workbench.
As we plan the future of our solutions, Todd Gottula, SVP and General Manager for Global Accounts and Tamale at Advent, has blogged on how we are guiding our engineering teams with a number of principles to complement our core tenets of innovation, responsiveness and reliability of which 3 could be phrased as: focusing on the individual user, designing for mobile platforms from the outset, delivering solutions to problems and workflows instead of products and by empowering an ecosystem of solution providers to solve problems beyond what we have the capacity to deliver ourselves.
Advent is focused on removing the barriers to using the latest – new solutions which will be available at the flick of a switch and intuitive enough to run proactively – and our clients won’t have to worry about whether they need to move between disparate applications and workflows to solve their business problems. We will further be discussing these changes at our client event in Monte Carlo in May.