Chicago-headquartered banking group
Northern Trust has added a new feature to its Hedge Fund Monitor product which allows fund of hedge fund managers to assess the impact of gates on liquidity in real time.

The practice of gating - which limits redemptions from funds – has been high on the agenda following the unprecedentedly poor performance of hedge funds last year. Many investors were disgruntled to find that contractual fine print prevented them from running for the exits. The issue of liquidity now looms large in the hedge fund industry, particularly so for funds of hedge funds due to the sheer number of disparate underlying investments they hold.

By incorporating all gating terms into liquidity calculations, the enhanced version of Northern Trust Hedge Fund Monitor allows FoHF managers to automatically know how much and when they can access cash from their underlying hedge fund investments. This development not only allows managers to make more effective decisions, but also enhances reporting and transparency standards, Northern Trust said in a statement.

“The FoHF industry faces many challenges in today’s market, and accurately monitoring and projecting liquidity is at the top of the list – we have seen a growing number of hedge funds imposing gates, particularly over the last 12 months,” said Ian Headon, Northern Trust’s asset servicing product manager for alternative investments.

“With the product’s new functionality, we are now adding gating terms to these models and reports.  This will also enable our clients to generate worst case liquidity scenarios where gates have been imposed by any number of their underlying hedge funds.”

Hedge Fund Monitor is the result of a partnership between Northern Trust and London-based company
youDevise, which provides web-based portfolio workstations for financial markets.