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
Software Patches
Vendor Cybersecurity Analysis
Business Continuity and Disaster Recovery
Big Data in Alternative Investment Operations
Chapter Summary
7 Additional Operational Functions and Tasks
Introduction to Additional Operational Functions
Operational Risk Management
Fund Reporting
Human Resources Management
Security Master Files
Unique Identifiers: CUSIP and ISIN
Multiple Versus Universal Security Master Files
File Verification Sources
Trading and Valuation Implications
Insurance
Treasury Function
Portfolio Financing
Counterparty Management
Collateral and Margin Management
Chapter Summary
8 Private Equity Operations
Introduction to Private Equity Operations
Private Equity Structure
Private Equity Administration
Private Equity Valuation Policy Example
Private Equity Operations Funding Process
Funding Timelines
Capital Call Procedures
Private Equity Compliance
Case Study
Chapter Summary
9 Fund of Funds Operations
Introduction to Fund of Funds Operations
Operations Role in Liquidity Management
Redemption Timeline Management Example
Other Redemption Timing Considerations
Facility Management
Separately Managed Account Allocations
Fund of Funds Administration
Chapter Summary
10 Documenting and Analyzing Fund Operations
Introduction to Operations Documentation
Purposes of Fund Operations Documentation
Operational Change Management Tracking
Investor Facing Operations Documentation
Operational Due Diligence Questionnaire
Chapter Summary
11 Ongoing Operations Management, Training, Surveillance and Testing
Introduction to Operations Training, Surveillance and Testing
Operations Training
Three Types of Operations Training
Operational Procedures Gaps
Operations Testing and Surveillance
Operations Testing Schedules and Frequency
Internal Audit
Case Study
Chapter Summary
12 Analysis of Fund Operations and Future Trends
Introduction to Analysis of Fund Operations Through Operational Due Diligence
Who Performs Operational Due Diligence?
The Pre-Operational Due Diligence Processes
Pre-Due Diligence Step 1: Analysis of Other Due Diligence
Pre-Due Diligence Step 2: Developing a Review Timeline
Pre-Due Diligence Step 3: Constructing a Review Team
Alternative Investment Fund Manager Operational Due Diligence Process
Step 1: Document Collection and Analysis
Affiliated Fund Document Requests
Asking the Fund Manager to Complete a Questionnaire
Service Provider Documentation
Document Analysis
Stage 1: Functional Expert Review
Stage 2: Project Lead Review
Stage 3: 360 Degrees Team Review
Step 2: On-Site Meeting
Phase 1: Interviews
Phase 2: On-Site Document Review
Phase 3: System and process walkthroughs
Phase 4: Office Tour
Step 3: Service Provider Confirmation and Review
Step 4: Report Generation and Recommendations
Ongoing Operational Due Diligence
Future Operational Trends
Chapter Summary