18/08/2010 Author: Tony Griffiths

Improved PB communication tops poll

Prime broker standards of service and communication, widely slated during the aftermath of the Lehman collapse, have received fresh support from hedge fund clients, with managers voting it the industry’s number-one selling point in an HFMWeek survey.  

Disappointment with the capital-raising environment appears to be lingering however. After a strong start to the year, the current slow rate of inflows – marred by May and June’s market volatility – has been a strong feature of the investment landscape, and survey participants rated the capital introduction category poorly across the board, resigning the service to last place by a significant margin.

According to recent Barclayhedge data, a combination of redemptions and poor performance cost the hedge fund industry $3.7bn in June. The results of the HFMWeek European Prime Brokerage Survey, in which hedge fund managers were asked to rate ten of the industry’s largest prime brokers across ten categories, were revealed this week.

The prime brokers, rated out of 7 (with 1 being poor and 7 being excellent), in the survey were: Morgan Stanley, Goldman Sachs, JPMorgan, Deutsche Bank, Credit Suisse, Newedge, UBS, Citigroup, SEB and Merrill Lynch. Categories included, among others: reporting, technology, operations and securities lending.

Of the ten categories, client service and communications was the only one to receive an overall score of ‘good’, with the majority of categories falling into the ‘satisfactory’ bracket. capital introduction was the only service to score an overall rating of ‘weak’.  

Client interaction is an area in which demand for improvement has been high. During the frenzied aftermath of the Lehman Brothers collapse in September 2008, the prime brokerage industry was accused of arrogance and aloofness, with a number of hedge funds reporting feeling abandoned by their primes. The HFMWeek Survey results suggest the industry has gone some way to addressing these concerns.