Advent Software’s Geneva has maintained a strong leadership position within the accounting and general ledger technology segment for hedge funds for many years now. Advent was itself founded in 1983 to develop technology solutions for financial professionals, and now has a client base extending into 50 countries. Its Geneva product was originally developed with hedge funds in mind, part of a joint project with Duquesne Capital and Goldman Sachs back in the mid-1990s. It now copes with the tough 24 hour trading environments leading hedge funds are used to, coupled with the scalability required by fast-growing businesses and successful spin outs from prop desks.
Advent Geneva: a proven solution
Geneva, a global portfolio management and accounting platform, is a proven solution for asset managers, hedge funds, fund administrators, prime brokers, and mutual funds that require a high level of operational efficiency and easy access to real-time data. Geneva offers 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.
In 2002 Advent Geneva saw further upgrades, with the introduction of a Windows client interface, innovative tools, STP capabilities, and functionality that extended through to middle office requirements. It was key to Advent that Geneva be able to meet industry levels of straight through processing, as it moved towards a T+0 trading and settlement environment.
Geneva’s footprint across prime brokers, fund administrators, asset managers and hedge funds means it is uniquely positioned to solve the main challenges in the hedge funds marketplace. The latest version, launched in June 2010, has evolved from a high-performance, back office accounting engine to a comprehensive, firm-wide portfolio management solution, which addresses the needs of the EMEA hedge fund space more than ever — a single platform where everyone from operations staff to portfolio managers can access the data they need, when they need it.
The product’s continued evolution, combined with Advent’s commitment to further enhancing the depth and breadth of its software is what helps to maintain this strong market position. As a key technology provider to the investment management industry, Advent is known to take its role of trusted partner very seriously, and itremains committed to delivering mission-critical solutions that address and meet the evolving business needs of the buy-side community.
“Part of Advent Geneva’s success has been its ability to allow verification of trades with prime brokers and fund administrators,” explains Thomas Zdon, Vice President of Business Development and Solutions Consulting, Global Accounts, at Advent. “It can be used to calculate market values, risk, indeed to slice and dice the data according to the requirements of the manager. We offer true NAV reconciliation, and we do it in such a way that it is operationally efficient. Our future plans will continue along these lines, working to meet the ongoing changes in the market.”
Advent Geneva lets funds view a high degree of additional detail, helping them with their margin costs, and allowing them to manage the expenses that emerge from a trading standpoint. With increased emphasis now on high speed trading, coupled with regulatory moves like the Markets in Financial Instruments Directive, fund managers need a solution that can help them stay on top of an environment that is demanding and constantly changing.
“The Advent Geneva platform is able to offer coverage of most types of asset classes,” explains Zdon. “It covers most of the types of investments out there right now, and we feel this has been crucial to its high level of take up in the hedge funds sector.”
Advent Geneva offers a complete look-through capability in terms of reporting. It allows the manager an opportunity to see what levels of risk have been taken to generate his returns. It can create reports and bespoke dashboards that can track multiple portfolios. On top of that, such reporting can be accessed globally from different offices and by different users within the same company.
What of the plans Advent has for Geneva in the future? Zdon says part of the development emphasis has to be on ensuring more asset classes can be added. Version 6.0 of the software, for example, included bank debt, a major step forward in terms of asset coverage for the hedge funds sector. The goal, Zdon says, is to have firms consolidate much of their risk and reporting requirements under one technological umbrella. “There should be no need for ancillary systems,” he explains.
Geneva is now on its eighth iteration, which includes powerful portfolio management capabilities, out-of-the-box integration to counterparties and industry leading data providers, and easy to use and customisable access to real-time data.
Market penetration
Advent Geneva’s leadership can also be spelled out in its sheer penetration of the hedge funds sector. The numbers speak for themselves. Eight out of 10 prime brokers are using it, along with 17 out of the top 20 fund administrators. And Zdon argues that such success stems from Advent Geneva being more than just an accounting package: “We were always an investment keeping platform,” he says. “Firms don’t necessarily have to use Geneva for fund accounting, it can do much more than that. We have been able to build bespoke interfaces at request. If functionality already exists on Geneva, it can significantly reduce the costs of implementation.”
In other words, before buying in new systems, firms could do well to give Geneva a second glance, and see what else it is capable of. It has hidden depths.
Geneva’s flexibility was demonstrated in 2009, when hedge fund administrator GlobeOp announced it would offer hosted and full platform conversion services for Geneva, on a stand alone basis, or integrated with GlobeOp’s middle and back office, fund administration and managed services packages. As one of Advent’s largest single customers, GlobeOp deploys significant in-house technical expertise to support one of the largest Geneva databases outside Advent itself. The firm produces more than 25,000 daily Geneva reports for its clients on a daily basis. In addition, it has successfully completed more than 200conversions of hedge funds from a broad range of systems to Advent Geneva, including an $8 billion firm.
In the case of GlobeOp, its hosted Geneva services enable clients to outsource infrastructure tasks and personnel requirements, reducing operational costs and risks. Data centre facilities and hardware monitoring are provided within GlobeOp’s two active, SAS 70 Type-II environment data centres.
Advent’s strategic partnership with GlobeOp has significantly increased the potential for firms of all sizes and strategies to leverage Geneva to improve their operations, reduce risk, and increase top line revenue. It offers a hosted environment, coupled with lower implementation risks, faster conversion times, and fewer headaches created by having to manage technology and integration in-house.
Constant evolution
In a business where cost is always an issue, including around technology systems and their implementation, Advent Geneva’s development team is very sensitive to the overall costs of ownership their software represents. “Our development team looks at nothing but efficiency when they examine potential new changes to ensure they produce the right information with minimium effort,” says Zdon.
Advent Geneva never stands still. A new fund of funds capability that was launched as part of Geneva 8.0, including liquidity tracking, is in the process of being rolled out. One of its first adopters was Vastardis Capital Partners, an administrator that looks after $20 billion in assets, 75% of it from funds of funds. Advent is providing Vastardis with an investment platform that allows for easy integration with internal and third party systems to support fund of funds workflow. It also provides enhanced security coverage to support direct fund strategy clients. “Funds of funds are particularly challenging, and with our prior system, we couldn’t integrate the way we wanted,” says John Stefankiewicz, Partner and Chief Operating Officer at Vastardis. “The open architecture has allowed us to integrate effectively our proprietary technology and workflow for our fund of fund clients. In addition, the enhanced bank debt and swaps functionality, new integration accelerators and superior data browsing found in the latest version of Geneva have put us in an even better position to grow our business.”
A client-driven system
Advent never seems to stand still in its quest to improve its products and services. The firm says it will also be carrying out operational reviews with all its clients to see if there are any other aspects of their businesses which can be properly addressed. “This is a client-driven system, and this is one of the hallmarks of its success,” says Zdon.
Advent Geneva has been able to gain traction with funds of funds and private equity funds because of this element of flexibility. It focuses on the relationships between the investors and the products. The move by the trading industry to T+0 settlement, and the challenges and pressures that represented, has also played its role. The emphasis has been on generating and moving that information within a fund management complex as quickly and accurately as possible. As the trade-to-settlement time has narrowed exponentially over the last 10 years it has required Advent Geneva to stay abreast of its clients’ demands, or simply get left behind.
With the crisis of 2008 and its aftermath, hedge fund managers have become even more focused on exposure management and overall risk management. Operational risks and efficiency are more of a ‘must have’ factor with investors, with the requirement of SAS 70 compliance becoming a more frequent item on investor shopping lists. Advent is also aware that its customers are facing up to brand new regulatory demands, in the shape of UCITS IV and the Alternative Investment Fund Managers Directive. “Advent Geneva is able to handle these new requirements,” says Zdon.
The cost of technology in the hedge funds space is coming downdramatically, partly driven by increased competition, but other factors are at play as well, including increased interconnectivity within the fund management industry, and cheaper overall technology costs for business. Advent Geneva was already able to compete on cost in 2004: its dominant market position has not meant that Advent has felt it should be charging a premium for the market leading software package. It also means the technology remains firmly within reach of smaller funds. “It is probably more affordable if it is being operated in-house,” says Zdon, “but it is still cost-effective for the start-up fund to use.”
Going forwards, Zdon expects Advent Geneva to become more firmly entrenched within the middle office function of asset management firms. There is now more stress on independent valuations, and on a high level of integration with service providers. There is also more demand for managers to deliver effective investor-based reporting. This is creating a headache for some COOs, who need to cobble together a reporting system from two or three different systems. It is something Advent Geneva can handle effortlessly.
As a good example, Maples Fund Services, an independent global fund administrator with $30 billion in assets under administration, bought Geneva earlier this year to help it to build up its middle office capabilities. The software helps it to link its global offices via a single, real-time fund accounting platform.
“Investment managers have a customised way of doing things, and a one-size-fits-all approach in middle office services just doesn’t work,” says Tyler Kim, Chief Information Officer at Maples Fund Services. “We work with our investment management clients to introduce best practices into their operations, help re-engineer their processes, and provide access to the information necessary to execute their investment strategies. Geneva is instrumental in helping us provide that level of service to our clients.”
Conclusion
It is Geneva’s adaptability and flexibility that has allowed it to continue to evolve to meet the challenging and often unpredictable demands the hedge funds industry throws at it. Underpinning this is the fact that it was designed in the first place to be an alternative investment management system – it is not a product from the long-only side of the industry being shoe-horned into the hedge funds sphere. In addition, the shift towards more transparent and real-time reporting means there will be more demand for Geneva than ever. The take up of the system to support managed account platforms is a good example of this. Ultimately, Geneva is unlikely to yield its primacy in the fund accounting/general ledger space any time soon: its ability to adapt to the needs of its client base should ensure this.