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FDN is not a Database

FDN is not a hedge fund database. In my prior role as an allocator I used various hedge fund databases and found them helpful. FDN, however, differs from these databases in many valuable respects.

FDN is a Network First and foremost, FDN is a dual-sided network. The network is private and exclusive to asset mangers and accredited investors. Users of the system can connect with each other, send messages, and develop relationships. Managers can benefit from reverse inquiry on FDN. Managers can use FDN to find allocators who might be interested in investing with them. This is simply not possible with a database, which is only one-dimentional.

You Own Your Info FDN does not own or control its users’ information – the users do. This is in contrast with a database, where managers supply information, and then it is sold in a way that is blind to them. They do not control the information and generally do not know who has access to it. On FDN, managers share information only with individuals of their choosing. They can revoke access at any time, utilize security features such as watermarking to protect their information, and maintain audit trails for compliance purposes.

Deep Information FDN allows managers to share much more information than a traditional database. Most information in databases is limited to basic fact sheet level data. FDN, in contrast, supports extensive document and data sharing for core due diligence processes. FDN also supports multimedia files.

Insights With a traditional database, managers can not see who has looked at their information. FDN provides managers with the insight into who has looked at their info, so they can followup with the institutional investors who are most actively evaluating them.

Build for Workflow FDN was built by industry partitioners as a tool to do work. The platform is designed to capture the vast majority of the information traditionally shared during a normal 3 year business cycle between a hedge fund and institutional investors notify, and notifies users of important important changes.

In summary, as an asset manger on FDN, your information is owned by you. You control it. You update it. You pick and choose who can see your information. You can discover prospective investors on FDN and communicate with them through the system. Using the Insights feature, you can see when users you have permissioned are accessing your information. FDN enables you to streamline the due diligence process in advance of allocations and keep those monitoring you fund up-to-date. FDN provides tools to allocators you work with to make their research efforts more efficient across their managers. As a result, FDN acts as a critical way in which you serve both your current and prospective clients.

Comparative Analytics

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In my prior role as an allocator to hedge funds, I spent countless hours each month gathering core information on the hedge funds I was monitoring. This information included performance and AUM statistics, monthly letters, and risk reports. To collect this information, I, and members of my team, would have to log into many different password-protected websites, locate old emails, and follow up directly with managers to receive all of what we needed. We would then manually extract the data from the documents provided and enter it into spreadsheets or internal systems to review it in an analyzable format for comparison.

This effort was so inefficient, it became clear to me that our team was actually spending more time gathering and reentering information than we were analyzing it, losing whole days of productivity each month in the process. What a waste!

At FDN, we recognized that hedge fund analytics is a problem for fund evaluators and investors, but one that, fortunately, could be solved through scalable technology.

About a month ago we released our solution to this problem, a new ‘Coverage’ page feature that allows users to create a custom list to compare important statistics quickly across the funds they are monitoring

The data surfaced in the application is entered directly into FDN by the managers themselves, and so, for allocators, that means no more onerous cutting and pasting! Managers on the platform are sent automatic reminder emails as well, regularly prompting them to provide their latest updates.

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When using the Coverage page, users can adjust date periods forwards and backwards, look at different types of quantitative screens.

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Users can download the statistics they are viewing into excel files to manipulate them further offline.

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Users are alerted to any pieces of data that may be missing…

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…and can easily click a button to request an update or send messages directly to the firm’s point of contact.

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These powerful interactive features meaningfully extend the capabilities of the Coverage page well beyond those of a typical quant screen.

If you are a head of manager research looking to enhance your team’s productivity and efficiency, please reach out to us. We would love to work closely with you and have you join the growing community of allocators who have started to adopt FDN as their enterprise solution. For the first time, your team will be able to focus their efforts completely on analyzing ready-at-hand information and comparing it easily across the managers they care about.

As always, we love hearing your feedback, and so as you take advantage of this innovative new feature, please let us know your thoughts!

The Hedge Fund Data Pipe

  • Institutional Investors, how much time and money do you spend each year gathering information on funds that you care about?
  • Hedge Funds, how much time do you waste populating the same information about your funds in different locations?

That is all changing. Now.

We are creating The Hedge Fund Data Pipe, a link between FDN and major institutional allocators and hedge fund databases. For allocators with internal legacy systems who are slower to adopt new technology, the Hedge Fund Data Pipe will allow them to receive an automatic data feed from FDN with information provided by hedge funds.

Data-Pipeline

The receivers of this data will not have to spend time gathering monthly letters, DDQs, PPMs, returns, terms, AUM, and other types of basic information used by all institutional investors. The information will be pulled directly to their internal systems so their analysts don’t have to change their behavior.

Hedge funds will not have to update their information in numerous hedge fund databases and large consultant or fund of hedge fund portals each month. They can simply enter their information into FDN, and select the locations to which they want their information to flow.

We currently have capacity to work with 5 large institutional investors to provide them with their specific data feeds. The initial firms embracing this solution will receive the service in advance of others at a meaningful discount.

Email me to get more out of your team.

FDN Embraces Operational Due Diligence

Providing software solutions to improve the due diligence process has always been at the core of our mission at FDN. Today, we are excited to share our roadmap for the next generation of operational due diligence technology.

Operations represents a key area of risk for fund managers, and continuous monitoring of these risks poses a practical challenge for allocators. Since 2008, we’ve seen a sharp increase in focus on operational due diligence, and along with it, a commensurate rise in human resource spending. While onsite meetings with manager personnel are important, the time spent at those meetings is better suited for interviews rather than data collection. Further, on-site operational due diligence meetings are conducted infrequently for any given asset manager. How, then, can your team stay apprised of important operational changes between check-ins?

Gathering data manually is an extremely time and resource-intensive way of attacking what is ultimately an information flow problem. It limits new knowledge to findings during proactive, periodic inquiry. Despite your best efforts, how do you know you’re consistently checking the right facts

Enter FDN. FundFire recently reported that we’re working closely with major allocators who want to address these very problems with technology. Here’s an excerpt:

Rising demands for manager due diligence are challenging consultants and managers to construct a more effective process for communicating with one another. [Research teams have] had to alter their approach to cope with shifting needs for resources and time. While the core due diligence checklist has not changed, [firms have] had to get creative and turn to new technological tools to simplify its vetting process.

Where [other solutions] focus on collecting performance data and other quantitative measures, Financial Diligence Networks targets the largest institutional allocators and hedge fund managers and allows them to post and obtain a wide scope of background information to decide whether establishing a relationship would be relevant for either firm.

[FDN] allows managers to provide stock answers to a variety of questions that may pop up in an RFP such as “How does your firm execute trades?” or “What are your cash control protocols?”. Consultants may then peruse those answers to get an idea of how each manager operates.

By having a wealth of data information up-front compared to how it was in the past, [it] is now [possible] to enter a meeting fully-informed on a manager’s processes, leaving more time to drill down on the things that you need, rather than gather information on-site.

Indeed, we believe our solution is well-poised to save the industry vast amounts of time and money while reducing risk. Our software treats operational due diligence as the information flow problem it truly is, and provides sophisticated automation and access control to support it. We’ve worked with experts in the field to understand their data collection process, and we’re ready to bring operational due diligence data to your fingertips, available 24/7 online.

How do I use it?

We’ve Finding the ODD Quick View taken our first major ODD feature out of closed beta. You’ll be able to access an operational overview of your managers by clicking on the ODD Quick View button on their profile. The content of this page elegantly displays the key operational details for the firm. You can think of this as an online representation of an ODD report that you might use to prep for a manager meeting – except that it can be gathered in seconds instead of days. odd quick view contentThe ODD Quick View boasts a number of new fields identified by the ODD experts we’ve partnered with, including ASC 820 asset valuation levels and technology systems. Managers can find these fields on their profiles to provide their most up-to-date information. Note that this page will only be available for managers that have granted you access to their product details.

What’s next?

As an industry, we recognize that data collection doesn’t just happen a single time (that is, during investment due diligence). However, we need to embrace the fact that it is truly not a periodic process, either. It is a continuous process. If a manager’s risk profile changes, you shouldn’t need to wait until the following year to find out about it. FDN aims to deliver important operational notifications to your inbox by developing a suite of monitoring tools to make sure you’re the first to know, rather than the last.

The features you see here are the tip of the iceberg. We’re looking for feedback from industry professionals who need a better solution for their ODD pain points. Please reach out to us so we can work together to build the next generation of operational due diligence technology.

A special “thank you” to the brand-name hedge fund firms and allocators who participated in our ODD beta program!

Chart source: Understanding and Mitigating Operational Risk in Hedge Fund Investments, Capco

Find and Connect with Asset Managers and Allocators Easily

We’re excited to announce a new feature on FDN that we’re sure will be extremely useful to you. Now you can visit our new Discover page to search for asset managers or allocators based on a variety of criteria including firm type, location, or even investment strategies.

Discover hedge funds and allocators

When you find asset managers or allocators that meet your goals, you can easily request more information or set up a meeting with a single click. You can quickly and easily make business connections and have their firm’s latest materials delivered to you in minutes. Once you are connected, you’ll be updated automatically when they make important changes on the network including adding new documents or performance, and you can access their materials from anywhere, even when you are on the road.

Check out the Discover page now!