Grosvenor Street goes live on H-Fund platform

LONDON – Grosvenor Street Capital, a London-based hedge fund group founded in June last year, has gone live on Financial Tradeware's H-Fund platform. H-Fund, based on Microsoft's .Net architecture, is a multi-asset class, multi-currency, Fix-enabled front-, middle- and back-office portfolio management system designed specifically for the alternative asset management industry.

The platform currently supports the fund's Grosvenor Street Global Special Situations Fund – a global long/short equity fund launched in December – and will shortly be rolled out to Grosvenor's Global Total Return Fund, a long-only global absolute return fund, which Grosvenor expects to launch by the end of this quarter.

Paul Warren, managing director of Grosvenor Street Capital, says the fund returned 8% in December 2005 and 6% in January 2006 and has since grown to approximately $25 million under management, up from its launch figure of $13 million of seed capital from the partners.

Warren spent 10 years at Morgan Grenfell (now Deutsche Asset Management) and had stints as global chief investment officer at Rothschild Asset Management and Putnam Investments. He explains that while working at Putnam as head of European research for funds of hedge funds, he was able to gain insight into the typical issues that funds consider during the technology selection process.

"I spent the last 18 months at Putnam working with a fund of funds and I got the opportunity to interview a couple of hundred funds during that time," he says.

"What occurred to me was that a lot of what they were using was far too sophisticated. The reality is if you're managing a macro or commodity trading adviser (CTA) fund you need something quite simplistic. Similarly, if you're managing a global equity fund you want something that makes sense and is easy to interpret, not something that's going to blow up every five minutes because of issues with your models."

Warren adds that one of Grosvenor's key stipulations was that its technology platform should make "intuitive sense". The basic premise for deploying a technology platform, he says, is to make it easier for users to understand the risks in their portfolios.

"We wanted a system that would integrate our front and back offices and allow us to manage a global equity portfolio, showing us positions and our risk exposure," he adds.

Having come from a large US institution that had an IT staff of hundreds, Warren understood the importance of having a single, integrated system underpinning the entire business, as well as the vendor's willingness to undertake customisation work on behalf of the fund.

"We wanted a platform that would be customised for us, would integrate the back and front offices, and would allow us to see the positions in the portfolio; and a thorough portfolio management platform in a single system," he says.

"The problem was that a lot of the products on the market are designed for fixed-income or macro funds as opposed to vanilla, global equity funds."

Warren says Grosvenor considered five systems before opting for Financial Tradeware's H-Fund platform, which suited the fund in terms of price and flexibility.

"One of the largest expenses for a start-up is its portfolio management system. Typically the base products are quite expensive, although you start to spend huge amounts of money when you ask your technology partner for enhancements," he says.