Case Study: Streamlining Hedge Fund Investments for a Family Office

Family Office Background

Our client, a family office, manages its own investments, including allocations to external asset managers, such as hedge funds. Their primary goal is to maintain control, transparency, and liquidity while efficiently managing their investment process.

Challenge: Curating a Menu of Hedge Fund Products

The family office faced several challenges in creating a curated menu of hedge fund products for allocation to selected external asset managers:

• Control and Transparency: Direct investments in hedge funds would result in a loss of control and transparency.
• Liquidity: Maintaining liquidity was crucial for the family office.
• Manual Processes: The subscription process for hedge funds is manual and time-consuming.
• Managed Accounts: While external asset managers were willing to manage accounts, this approach was not scalable for the family office and led to tax inefficiencies and unlimited downside liability.

FundFront’s Securitized Solution

FundFront provided a tailored solution by creating dedicated securitized vehicles through our issuance platform. This enabled the family office to create products for each of their chosen external managers.

Key Aspects of the Solution

• Dedicated Products: We created dedicated products for each external manager, with unique ISINs along with the necessary documentation.
• Seamless Integration: The family office could subscribe to these products through their existing bank and brokerage accounts.
• Operational Efficiency: FundFront’s platform manages all operational and administrative elements, including accounting, NAV calculations, and fee distributions.
• Manager Interface: For external asset managers, the products function like managed accounts, allowing them limited access to trade portfolios alongside their other existing products.

Implementation: Establishing a Curated Menu

For each external manager that the family office wanted to work with, FundFront created dedicated products. These products were set up with their own ISINs, termsheets, and brokerage accounts, ensuring a seamless integration into the family office’s existing infrastructure.

Results: Achieving Efficiency, Transparency, and Security

Within a few weeks, the family office had a dedicated and curated menu of alternative investment strategies. Key outcomes included:

• Efficient Subscription: The family office could subscribe directly to the products through existing bank accounts, streamlining the investment process.
• Enhanced Control and Transparency: The securitized vehicles provided the control, transparency, and liquidity the family office required.
• Operational Excellence: With FundFront handling all operational and administrative tasks, the family office could focus on strategic investment decisions.

Conclusion: FundFront’s Impact on Family Office Investment Management

FundFront’s securitized solution enabled the family office to efficiently manage their investments with selected external asset managers. By creating dedicated products and streamlining the subscription process, FundFront delivered the control, transparency, and liquidity the family office sought, alongside operational efficiency and security.