Citigroup wants to help hedge funds operate more efficiently and has a model to make that a reality.
The financial services firm's prime brokerage unit introduced on Wednesday the "Hedge Fund 3.0" concept, based on its study of hedge funds in the past two years.
Hedge Fund 3.0 is designed as a guideline for building a successful hedge fund by focusing more on the core of their business — promoting to potential customers and growing the assets under management.
The way that will happen successfully during the Hedge Fund 3.0 model is by hedge funds shedding a number of in-house operations and outsourcing them.
The model identifies what measures would be beneficial for hedge funds to attain efficiency along with savings: business process outsourcing for various day-to-day functions, specialist HR and benefits brokers, off-premise IT services and knowledge process outsourcing.
(A) previous Citigroup survey found that firms spare no expense when it comes to computer operations as it projected that hedge funds will spend over $ 2 billion on information technology in 2011.
Sandy Kaul, U.S. head of business advisory at Citi, said hedge funds in today's markets should consider Hedge Fund 3.0.
"These firms can think strategically about the use of outsourced partners, especially when facing trigger events, such as, expansion to larger office space, replacing end-of-life equipment, moving to multi-currency operations, or launching a new investment strategy," Kaul said. "Over time, many funds will move to a hybrid approach that combines in-house and outsourced resources."
Citigroup's New Hedge Fund 3.0
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