Hedge Fund Accounting

By: EconomyWatch   Date: 23 November 2010

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Hedge Fund Accounting play a very important part in the hedge fund company. It is mainly used by the hedge funds for compiling the brokerage statements associated with them. Hedge Fund Accounting also helps the partners of the concerned fund in maintaining the detailed records on the fee structure, profit and/or loss of the respective partners of the firm, etc. The maintenance of this Hedge Fund Accounting helps the hedge funds to determine the different aspects of the funding.

Hedge Fund Accounting can be availed by the hedge funds either by hiring an accountant or by outsourcing the same to a firm specialized in maintenance of the accounting operations. Among the above mentioned two options, the hiring of an accountant by the fund house is more desirable because the same person would also be able to intimate the house on certain important factors and matters, namely, portfolio analysis and identification of the exposure related matters. The accounts who are hired by the fund itself are also a cost saving affair because the fees charged by a CPA firm are quite high and it gets saved through the hiring of such an accountant who has the required knowledge on auditing and on taxes.

The outsourcing of the Hedge Fund Accounting to such a company who are specialized in providing the accounting services are also a cost saving proposition.

The most important aspect of the Hedge Fund Accounting is the allocation of the funds in the partnerships which is called the Break Periods. Whenever any of the partners increase their contribution towards the fund and/or leaves the organization, then this period is known as Break Period surface. This period also comes into existence if the concerned hedge fund is contributed by another partner. The break period has a specific date for ending and it is the month's last day. From the very next day of the ending of the break period, the share of each partner in percentage terms would be decided. Hence, in brief we can say that when ever any factor affects the percentage share of a partner then only the break periods will come into existence.

The charges associated with the management has been calculated in the Hedge Fund Accounting and is fixed to be one percent per year and is charged on a quarterly basis. These fees are charged on the first day of the months of January, April, July and October. On the same dates the determination of the NAV of the different partners of the hedge fund would take place.


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