IQ-EQ’s Group Head of Funds Justin Partington

IQ-EQ Hybrid Fund Services

What are the unique administrative challenges associated with hybrid funds?

Hybrid funds offer several distinct advantages over more traditional investment vehicles, both for investors and managers. For investors, hybrid funds provide liquidity options suited to the types of assets held in the fund and flexible requirements for investors to enter and exit the fund easily.

However, the non-standard nature of hybrid funds presents several challenges when it comes to their management. Holding different types of assets, with different fee structures, adds considerable complexity. Along with the need to match the liquidity offered to investors to the cash flow profiles of the underlying assets, managers need to ensure that redemptions do not cascade into a run on the fund. Furthermore, accounting and reporting requirements for hybrid funds place an additional burden on a manager’s operations, with different valuation frequencies and reporting requirements between public and private assets.

How does IQ-EQ ensure the requisite level of transparency into these complex funds?

The need for transparency and increased reporting has been growing, particularly from investors and managers, who are more familiar with openended or hedge fund structures.

The ability to integrate technology platforms across the fund structure from asset level all the way through to investor reporting is increasingly critically linked to subject matter experts knowing and understanding the unique aspects of the fund. One of the ways IQ-EQ has supported this is through combining subject matter experts from private markets with public market experts to support the onboarding and set up of the hybrid funds structure within our systems. This ensures that the fund Justin Partington, IQ-EQ’s Group Head of Funds talks to Global Investor

Justin is responsible for leading IQ-EQ’s global offering for alternative asset managers. He also sits as an Independent Director on the boards of several real estate and private equity funds.

is running on rails and any specifics or complexities for reporting, data aggregation or portfolio monitoring, can be set up from the start through working closely with our clients.

What role does technology play in helping to administer this new breed of funds?

Technology has played a key role in the expansion of hybrid funds. At IQ-EQ, our offering has been developed around a sophisticated and integrated technology platform that leverages PFS Paxus as a single integrated system that services both liquid and illiquid asset classes end-to-end. On top of our core offering, we combine market-leading solutions and dedicated software platforms to provide value-add asset level, SPV, middle office and AML/KYC services. We have also leveraged our IQ-EQ Cosmos platform which allows us to combine data feeds from custodians, prime brokers, and other accounting platforms to produce enhanced consolidated reporting and analytics.

How are you planning to further develop the service into 2022?

IQ-EQ will continue to integrate our reporting capabilities across new asset classes and jurisdictions as we build out this offering. Working collaboratively with our clients enables us to identify other opportunities to deploy technology, third-party integrations, or services to meet the needs of this growing market.

The benefit of IQ-EQ’s broad service offering means client service teams can engage experts from across the business as clients increasingly demand traditional value add services such as ESG, middle office and client portals.

What other innovation can we expect from IQ-EQ in 2022?

We are currently working on several exciting technology-led solutions for fund managers including an automated platform for complex carry waterfall calculations. The platform will be powered by a sector-leading carry tool which uses configurable algorithms with an intuitive bespoke dashboard to provide complex carry waterfall calculations and scenarios.

Video available to view on digital version of Global Investor at www.globalinvestorgroup.com

www.iqeq.com