By Kelly Lynch
This post is a brief reflection from the winter-spring conference season for operations professionals:
‘Alts’ means something different, depending on where you sit in the support system.
- Portfolio managers think about alts based on what a fund is investing in—like real estate or private companies.
- Broker-dealers and other distributors might think about alts based on who can invest in them and who the investment is suitable for—like wealthy investors or institutions.
- Operations people think about alts based on differences in servicing requirements, fund rules such as tax reporting, trading calendars, tender offers, proration, etc.
Regardless of the viewpoint differences, alts products are growing in volume and popularity, creating challenges for the operations team. Their challenge is to handle what have historically been low-volume activities—sub docs, capital calls, tender offers, proration, etc.—in a high-volume retail environment servicing an investor base that expects an experience consistent with their other investments. Envision supports a number of fund servicers in this space, bringing a volume/retail approach and automation to support the unique operational requirements of these products.
My colleague Brian Jones addressed this well in conversation with AltsWire:
“Fund servicers typically separate operations for traditional funds and alternative funds. Traditional fund operations are usually geared toward processing NSCC networked accounts, omnibus accounts, and check and app business. However, interval funds and other alternative fund products require very different processing and technical solutions. Alternative shops are used to handling hedge funds and other products that require partnership accounting while interval funds are 1099 reportable. Therefore, handling interval funds presents challenges in either shop.”
How are shops rising to the challenge?
I particularly liked the way Matthew Clark, Managing Director of Alternative Investment Advisory Services at KPMG, summarized the challenge during the Sifma Ops 2025 conference earlier this month in Grande Lakes, Florida. During a panel discussion on “Modernization of Alternative Investment Processes,” Clark suggested the range of operational-platform options for alts products looks like this:
- An end-to-end solution from a single vendor, sacrificing “best of breed” for “out of the box”; or
- Bringing together the pieces— “best of breed” for front, middle and back-office solution providers; or
- An unworkable option: putting the product in an environment not tailored for its unique needs.
We see ourselves as fitting into option #2, with an emphasis on:
- Flexible software that automates specialized fund features such as trading calendars and proration
- Automation to support scale
- Easy connections to existing systems and processes
We also combine many pieces into one place—workflow, core recordkeeping, tax reporting, bank automation and more. These have long been table stakes for traditional retail funds and are essential for efficiency as operations teams manage more complex products.