Hedge fund services operate outside the strict regulations of mutual funds and traditional money management firms. This doesn't mean that there aren't forms to file and reports to compile, it's just that hedge funds have more investment freedom. This also makes starting a hedge fund more fraught with risk than a mutual fund. Should you decide to start a hedge fund, you'll need to understand hedge fund accounting and administrative basics. Hedge fund administration services are essentially your one stop shop for setting up a hedge fund.

Hedge fund accounting services are the outside entities that monitor your fund. Hedge fund accounting and administrative components work in tandem to help you establish, sustain and regulate the hedge fund. Finally, there are associations that can provide basic hedge fund guidance and software applications to help you with the actual trading of investment vehicles.

1. Contact an association for hedge fund administration guidance.

2. Utilize hedge fund administration software.

3. Investigate potential hedge fund accounting and administrative services.

Action Steps
The best contacts and resources to help you get it done

Speak to a representative for a hedge fund administrator association

Associations are a great source of information for the hedge fund industry. Members of these associations have experience with most every situation that may present itself when starting a hedge fund. They can also recommend accounting and administrating services for your fund.

I recommend: For the accounting services of your hedge fund, the Chartered Alternative Investment Analyst Association can be of assistance. For multiple perspectives, read the "Alternative Viewpoints." The Hedge Fund Association can help with specific fund issues and help with administrative services. For more information read through the articles on its website.

Use hedge fund accounting software to help maintain your fund

The Internet changed the way hedge funds operate. Hedge fund accounting and administrative software utilizes technology to make managing your fund much easier. Software solutions supplement accounting and administrative services, but you shouldn't use them as a substitute.

I recommend: Try the hedge fund software from Nirvana Financial Solutions or FundCount Office to help manage your fund. You'll need to verify the computer system requirements prior to purchasing any hedge fund software.

Contact professional hedge fund administrators and accountants

You'll need to hire an accountant to audit your fund and an administrator to set-up and help manage the fund. If you're new to the industry, it's best to use an established firm. These firms will cost more to employ, but their history of accomplish is usually impeccable.

I recommend: For accounting services, you should contact Green & Company, which also providers tools, or Rothstein Kass, which has a resource center. J.P. Morgan and Bank of New York Mellon, offering news and events, can provide your company with excellent administrative services.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Hedge fund accounting and administrative services basics are a good start to hedge fund management. However, you might want to obtain a job at an existing hedge fund to truly understand the industry. Then you can establish your own fund.

Hedge fund administration services often combine partnership accounting, fund accounting, portfolio accounting, investor relations and document management. Larger accounting firms often provide comprehensive and administrative solutions domestically and internationally.

Hedge fund accounting firms who use online portals to manage funds focus more on the portfolio. Performance reporting generates faster, and hedge fund administrators have access to financial information 24 hours a day, 7 days a week.

1. Hedge funds provide flexible investment opportunities, and can yield a great deal of profit. Hedge fund administrators are available at investment firms to help you find the right fund.

2. Hedge fund strategies protect investors from downside risk and are considered to be a better investment opportunity than mutual funds.

3. High gains in hedge fund investments reflect investment flexibility and performance incentives.

4. Hedge fund investing is an important alternative to traditional mutual fund and stock option investing.

Action Steps
The best contacts and resources to help you get it done

Acquire hedge fund administration advice

Hedge fund accounting services offer classes on investing strategies, commodity trading and alternative investment opportunities. A hedge fund administrator is an experienced investor, providing guidance to clients in meeting their long- and short-term investment goals.

I recommend: NAV Consulting, Inc. provides daily and monthly hedge fund administrative services with a focus on alternative investments. Find hedge fund managers on Information Company Inc.

Decide if you need hedge fund accounting and administrative services

If you want an aggressively managed investment portfolio, you want an equally aggressive hedge fund accountant or administrator. Hedge fund accounting and administrative services can provide advanced strategies in investing such as leverage and long and short-term derivative positions. Your goal in hedge fund investing is high returns through partnering with private investment groups.

I recommend: Nottingham is an independently owned hedge fund accounting and administrative service. You can decide if you are ready for hedge fund investing with a quick consultation with a hedge fund accountant over the telephone. Piedmont Fund Services, LLC is a mid-sized hedge fund company. You may feel more comfortable consulting with a smaller firm.

Select a team of hedge fund accountants who are right for you

The goal of a hedge fund accountant is to provide accounting services to clients with specific needs. Standardization is not the type of hedge fund services you are looking for as a client. In addition, hedge fund administrators are costly and your portfolio may not require the added high cost of administrator services.

I recommend: Kaufman, Rossin & Co. is a financial service company that employs a team of hedge fund accountants assigned to individual investors making the investment process less stressful and more rewarding. Part of hedge fund investing is auditing. In order to find a hedge fund administrator you can do an online search at Accounting Aisle.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  The SEC and Federal government don't regulate hedge funds. Do your homework before you make a decision to invest. Get advice from a hedge fund administrator before you make a large financial investment obligation.
• •  Make sure your portfolio is diversified. Don't put all your money in one place. Hedge fund administration focuses on diversification and low risk investing with high gains.

Hedge fund administration services are an industry that's constantly adapting to the fast-paced world of equity investing. To stay on top of changes within the industry, it's imperative that your company knows the latest hedge fund accounting and administrative news and trends. Over 60 percent of hedge funds outsource at least part of their accounting and administrative services and this trend is increasing each year.

Whether you're a hedge fund administrator, investor or accountant, the fact that most hedge funds are starting to outsource means another layer of complexity in an already complex industry. For instance, if you wanted to start a hedge fund, finding a reputable accounting service would be near the top of the list of priorities. Essentially the hedge fund administration services companies are a one-stop shop for fund operators. For business investors, these services provide verification of the hedge funds' sustainability and profitability. To know the latest news and trends within the industry, there are a few items to consider, such as:

1. Use hedge fund administration services news and review websites for industry information.

2. Review the latest postings on hedge fund administration blogs.

3. Register for hedge fund services' RSS feeds.

Action Steps
The best contacts and resources to help you get it done

Utilize the hedge fund accounting services reviews and news websites

Hedge fund reviews offer a depository for industry ratings and news. No matter what your interest in hedge administrative services, the reviews that they offer can be invaluable. They offer more than just industry trends and news. Hedge fund review websites act as a clearinghouse for all the various aspects of the hedge fund industry.

I recommend: Subscribe to the Hedge Funds Review for industry insight and information. Sign up for the Opalesque news briefing for daily updates on the industry.

Visit hedge fund administrator blogs

Blogs are an excellent source for hedge fund administration and accounting information. However, because these blogs are sometimes more of an editorial, they need to be a secondary, rather than a primary source of hedge fund accounting and administrative services news and trends. Since these blogs are largely unregulated and contain the opinion of the owner more often than facts, they may not always be completely accurate. Conversely, because blogs are a nimble information medium, they can often spot industry trends before traditional media would.

I recommend: Examine HedgeFundBlogger.com and Hedge Fund Law Blog for administration and legal information about the industry.

Sign up for the hedge fund administrative services RSS feeds

With an RSS feed, you can have information from a particular website sent to your computer based on the topic you choose. For example, you could register under the hedge fund administration topic and the website will then notify you when new content becomes available. This saves you the time and effort of searching and visiting other websites for the latest news and trends.

I recommend: Enroll in the RSS feed program from HedgeWeek to stay current on industry trends. Register for the RSS feed at FierceFinance for late breaking news on hedge fund accounting.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  For hedge fund administrators, these services are imperative to maintaining and attracting new clientele. These companies provide your clients with hard numbers that demonstrate your funds' viability. Therefore, you need to choose the service with the best track record and quality service history.

Hedge funding accounting and administrative services help a manager handle the clerical, tax, and financial reporting aspects of running a fund. Hedge fund managers have their hands full running the trading aspect of a fund and need accounting and administrative services to manage the financial details. Besides, it's important that a hedge fund has a third party to monitor the fund activities for proper transparency. In order to understand hedge fund accounting and administrative services, it's imperative to know some key terms.

Action Steps
The best contacts and resources to help you get it done

Net asset valuation calculations

One of the primary responsibilities of a hedge fund accounting and administrative service company is to calculate the net asset value of a given fund. The net asset valuation calculations take the total hedge fund value and divide it by the number of the available shares. The Securities and Exchange Commission sets the rules for computing net asset valuation.

I recommend: Review the net asset valuation information available at Blue Collar Dollar.

Contract notes

Another responsibility of the hedge fund administrative and accounting service is the generation of contract notes. The contract notes are what an investor in the fund uses to check and verify the transactions a fund makes on a daily basis.

I recommend: Examine the role of contract notes in hedge fund administration from Incademy.

Independent verification

If you're thinking of investing in a hedge fund, independent verification is a key service that the hedge fund administrative and accounting service provides. This independent verification allows an investor to avoid hedge fund frauds and the hedge fund manager the ability to provide third party verification of fund returns.

I recommend: Scroll down to the article from Life 123 to examine the importance of independent verification in hedge fund investing.

Due diligence

Due diligence is the process by which a potential investor researches the industry and individual funds. Hedge fund administrative and accounting services plays a key role in facilitating due diligence. These service companies provide investors with an independent report to gauge fund quality.

I recommend: Review the due diligence resources and definition at the blog of Richard Wilson.

Performance attribution reports

Performance attribution reports rely on the information provided by the hedge fund accounting and administrative service company. You can judge the relative industry performance of any hedge fund based on these reports. Some administrative and accounting companies produce their own reports as well.

I recommend: Evaluate the performance attribution report tutorial from State Street.

Chinese wall

The Chinese wall is the separation of different company divisions to ensure data integrity. A hedge fund administrative and accounting service provides this in that it's separate from the hedge fund and is supposed to have no vested interest in the profits of the hedge fund. Therefore, investors can rely on this data to make a sound investment.

I recommend: Assess the Chinese wall information available at Investopedia.