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HedgeTek is a rules based investor accounting allocation platform for alternative funds. Its depth and breadth of production proven functionality, combined with an intuitive user interface, provides users with the ability to easily and accurately process even the most complex rules and fund structures. Our experienced and knowledgeable professional team has continued to develop and fully integrate new routines to meet the ever evolving requirements of our clients and the industry. Our ability to consistently deliver these ongoing functional enhancements has resulted in continued workflow improvements and associated cost reductions for our clientele.

Since its launch in 2001, HedgeTek enhancements have always been validated with inputs from leading administrators, hedge fund managers and major accounting firms. This fully integrated Investor Allocation Solution addresses both Book & Tax Accounting for unitized and monetized funds. The ability to structure rules to accommodate virtually any fee scenario, to seamlessly process complex multi-level Master/feeder structures in a single pass, and to handle the requirements of the most creatively designed side pockets, has made HedgeTek the solution of choice for many of the major participants in this space.

HedgeTek is used by top-tier Hedge Fund Administrators (7 of the top 14 Administrators as measured by AUM) and global multi-billion dollar Hedge Fund Managers, supporting over 3000 structures valued at over $500b.

Key Features

  • Ability to upstream interface with any General Ledger system
  • Fund based fee rule parameters that can be modified at the partner, class, series, or tranche level
  • Fees can crystallize in advance, or in arrears based on opening, closing or average balances within a specific fee period
  • Fees can be either Fixed or Tiered and with different measurement periods
  • Fees can be calculated in local class currency
  • With appropriate permissioning, all system-generated fees can be manually overridden
  • Multiple hurdle parameter rules can be set
  • Computations of selected tiered/fixed Benchmark/Hurdle Rates (both cumulative and non-cumulative)
  • An option is available to exclude specified P&L categories from being subject to incentive
  • System maintains high water marks at the partner, tranche and class series level
  • Claw-back provisions are supported as well as Catch-up provisions with a minimum return
  • Equalization accounting
  • Ability to upload partner indicative data, existing profit & loss classifications, legacy year end balances, and several other categories of information to alleviate data entry errors during the system conversion process
  • A multi tiered master feeder structure that links onshore and offshore feeders providing a seamless automated allocation of all Profit and Loss items flowing down and across these structures.
  • HedgeTek supports both "full netting" and "partial netting" for tax
  • Tax can be processed synchronously with "economic book" allocations on a break period basis, or separately through the more traditional annual aggregation process
  • Annual Aggregation funds are driven by Weighted Average Capital percentages. HedgeTek can incorporate the necessary tax adjustments such as M-1, and Reclass adjustments
  • Accounting for Built in Gain Loss on Contributed Securities
  • Additional U.S. Tax Functionality includes: Comprehensive stuffing provisions on all redemptions for investors redeeming from the fund; Stuffing overrides to adjust automated calculations. The system also has the ability to designate and sequence specific gain/loss items for stuffing allocations besides pro-rata basis
  • Generates Federal K-1 for a single or all of the investors at the end of any break period or tax year end
  • PFIC tax allocations
  • Lockup and penalty profiles can be structured to address different penalty and lockup rules, along with an ability to set up a one day window to for a withdrawal without penalty
  • Ability to support rolling high water marks (Lone Pine Model) where reduced fees can be taken while underwater and offset by reduced fees at the same or even a lower rate after crossing the high water mark until the investor in made whole
  • Ability to support fees based upon benchmarks and to trigger performance fees when negative performance beats the negative performance of the associated index
  • Capital activity can be recorded through intuitive user interfaces to further reduce data entry and associated errors
  • Subscriptions, redemptions or one step assignments and transfers can be booked in the system as an opening or closing transaction within a given break period
  • Shares that are not under water can be rolled up from one series to another based upon numerous user defined rules
  • HedgeTek supports the transfer and exchange of units between investors/classes as well as dividend distribution and reinvestments
  • Users can define GAV per share and/or user defined FX rates for recording subscriptions and redemptions
  • HedgeTek can support the booking and editing of future subscriptions, redemptions and transfers and issue confirmations and contract notes for the same
  • HedgeTek supports the accounting of illiquid assets (side pockets) through carve out transactions based upon user defined rules
  • The automated carve out facility will transfer funds from the liquid pool to create a side pocket and to do follow up investments by selecting all or some investors participants
  • On partial or full realization of side pockets, capital will move back to the liquid pool
  • Investors who are fully withdrawn in the liquid pool with zero book capital, can still be maintained as active within their remaining side pocket investments
  • Separate reserve account is maintained for these investors at the liquid pool level
  • Separate accounting is maintained for each side pocket with facilities to transfer book income and all fees to the parent tranche in the liquid pool
  • Management fees at the side pocket can be accrued for fully withdrawn investors with delayed crystallization netted with any performance fees and income earned until the realization of the individual side pocket
  • Side Pocket allocation can be processed based on a cost, commitment or book capital basis

Key Benefits

As a production proven, rules based system, supporting the vast majority of the complexities involved with book and tax allocation, HedgeTek is both an efficient and effective solution for alternative investor accounting.

The most salient benefits to organizations deploying HedgeTek are:

  • Limited period to period data entry, significantly reducing associated errors
  • The ability to set up and automatically execute rules to conform to the specifics of the fund and each participant at any level, to eliminate manual intervention (with associated errors) except when desired overrides or adjustments have been determined by the user.
  • A fully integrated platform that provides straight through processing of the rules set by the user providing rapid accurate results at each accounting period
  • The comfort to know that Fi-Tek has a ongoing successful track record of developing and integrating complex new requirements for major financial institutions and can continue to do the same should the need arise from your organization

The goal of HedgeTek was to provide our clients with a "smart" application, that can exercise the rules that have been setup by the user and allow the accountant to spend their time analyzing output reports and working with their own clients rather than performing laborious, time consuming, and error prone clerical activities (data entry). At no time other than for new enhancement activity should any HedgeTek need to apply offline workarounds to complete the allocation process