Alternative Investment Operations: Hedge Funds, Private Equity, and Fund of Funds

1 Introduction to Alternative Investment Operations

Introduction

Classifying Fund Manager Activities

Comparing Investment and Operational Functions

Operations Role in Facilitating Investment Procedures

Dependency of the Investment Function on the Operational Functions What Is Unique About Alternative Investments Operations?

Different Alternative Investment Strategies Merit Specific Operational Practices

Operational Risk Management: Trading Operations and Compliance Example

Chapter Summary

2 Trade Operations: Execution, Settlement and Reconciliation

Introduction to Trade Operations

What Is Being Traded

Trade Idea Generation

Trading Strategy Compared to Trade Idea Generation

Trade Implementation

Order Entry

Pre-Trade Blotters

Electronic Versus Physical Pre-Trade Blotters

Pre-Trade Compliance Checks

Trade Execution

Trade Give-Ups

Trade Confirmation

Trade Clearing

Trade Settlement

Trade Reconciliation

Trade Allocation

Human and Computer Trading

Chapter Summary

3 Cash Management, Oversight and Movement

Introduction to Cash Usage in Alternative Investments

Four Primary Categories of Cash

Cash Storage Locations

Master-Feeder Structure

Cash Accounts for Different Funds

Cash for Expenses

Expense Policies

Cash Movement for Expenses

Cash To Facilitate Trading

Cash Sweeping Frequency

Cash To and From Investors

Unencumbered Cash

Cash Controls

Cash Initiators and Approvers

Single Initiator Approver Model

Cash Threshold Model

Different Initiator Approver With No Threshold Model

Chapter Summary

4 Compliance Operations and Governance Considerations
Introduction to Compliance Operations and Governance Considerations

Mandatory Compliance

Sources of Mandatory Compliance Rules

Voluntary Compliance

Regulatory Guidance

Self-Imposed Obligations

Operational Compliance

Alternative Investment Governance Considerations

Chief Compliance Officer Models

Chief Compliance Officer Duties

Common Compliance Documents

Common Compliance Policies

Chapter Summary

5 The Role of Service Providers in Alternative Investment Operations

Introduction to Alternative Investment Service Providers

Fund Administrators

Conflict of Interest Considerations

Role in Valuation

Valuation Consultants

Compliance Consultant

Personal Trading Program Oversight

Electronic Communication Monitoring Oversight

Mock Audits

Other Services

Legal Counsel

Accountants and Auditors

Custodian

Other Service Providers

Chapter Summary

6 Information Technology Operations

Introduction to the Role of Technology in Operations

Information Security Policy

Information Technology Consultants

Data Rooms

Cybersecurity

Penetration Testing