I.A. Englander MA&PS Survey Shows Hedge Fund Managers Desire for Technology Solutions Enables Them to More Effectively Manage Their Business

NEW YORK, Oct. 21, 2013 /PRNewswire/ — I.A. Englander Managed Accounts & Prime Services (IAE MA&PS), a unique technology platform offering powerful solutions for emerging hedge fund managers, CTAs and investors, today said that many of the hedge fund and CTA managers participating in its recent survey expressed dissatisfaction with their prime brokers' inability to offer technology solutions to help them more effectively manage their risk and assist them with managing and growing their business.

Commenting on the survey, Brett Langbert, Managing Director of Sales and Distribution, said, "The results of the survey solidified our holistic belief and thus the catalyst for launching MA&PS.  Allocators of capital are investing in emerging hedge fund managers and CTAs via managed accounts.  The manager responses exhibited that managed accounts present a complex workflow that requires infrastructure solutions that should be addressed by their prime brokers."

In a breakdown of the type of services that attracted the hedge funds to their prime broker, the survey found that the technology/reporting function was the leading service (35%), followed by operations coverage/competency (30%) and execution rates (25%).

Further, more than half (55%) of those surveyed said their prime broker doesn't offer the appropriate technology to help raise capital for their firms, compared with 30% of the firms who said their prime broker provided this service.  In addition, while nearly all of the hedge funds believe that capital introduction plays an important role when selecting a prime broker, most of the hedge funds were dissatisfied with their current level of capital introductions.

On a scale from one to five, with five as the highest and one as the lowest in terms of satisfaction, hedge fund managers gave it a rating of 2.2.  Many of the clients surveyed are looking for technology solutions to aid in their capital raising efforts, in addition to or in lieu of traditional capital introduction models.

The IAE MA&PS survey, which was conducted in September, polled hedge funds with $500 million or less in assets under management (AUM).  Other highlights of the survey include:

• The majority of the survey respondents (75%) use managed account programs, with more than half (55%) say their firms have benefited from these types of programs.
• On a scale ranging from one to five, with five as the highest and one as the lowest, most of the firms experienced an above-average level of satisfaction (a 3.6 rating with their managed account program).
• Forty-three percent of the hedge fund managers cited relinquishing transparency to investors as the primary reason their firms did not use managed account programs.  Other reasons included:  lack of interest, complexity, too many trades to split every day, or firms currently in start-up mode.
• Half of the firms reported no loss in scale of its trading strategies and counterparty relationships due to utilizing managed account programs, compared with 10% which did experience this problem.
• More than half (55%) of the respondents say their firms are using an introducing prime broker in its relationship, compared with 40% who don't.
• Only about one-third of the respondents utilized a multi-prime structure. The remainder used a single-prime broker.

Langbert concludes, "IAE MA&PS' business model provides a solution to the managed account equation – our offering is a unique platform in the marketplace that provides a real value add via technology, operations, infrastructure and identifying means in which allocators and managers can seek each other out.  This model does not increase overhead but rather streamlines costs for both allocators and managers."

About MA&PS

I.A. Englander's Managed Accounts and Prime Services division (MA&PS) is the premier provider of value added, managed account & multi-prime brokerage services for the small and mid-cap hedge fund community and investors. MA&PS offers a customizable platform with cutting-edge technology for risk management and reporting tools supported by experienced professionals delivering competitively priced concierge/white-glove services and support.

About Israel A. Englander & Co.

I. A. Englander was founded in 1977 as a partnership on the American Stock Exchange (AMEX) and a floor brokerage "boutique." Today, Englander's core options execution business represents a significant share of the daily traded contracts on the NYSE AMEX and the Chicago Board Options Exchange (CBOE). Dedicated to providing a true value add to its institutional customers, the firm leverages deep rooted relationships, leading edge technology solutions, and high touch service to optimize the client experience.

The firm continues to have a significant presence on the floor of the NYSE Amex and CBOE being strategically positioned to provide clients with direct access to market liquidity.

I.A. Englander is a FINRA and SIPC member.