Ross Newell, Business Development Manager at CMC Markets Institutional spoke with HFM Magazine in February 2020 to discuss the challenges faced by emerging fund managers and how they can best strike that balance between getting the quality and the price they need to make their strategies successful.
Because funds will often start with a very tightly defined remit, this makes the broker selection process relatively simple. However, as demands evolve over time, access to a wider range of assets is likely to become necessary. Managers therefore need to be aware of the benefits and consequences of spreading business across multiple brokerages and how they need to accept the reality that in the vast majority of instances, they will be the proverbial small fish in a big pond.
Non-bank brokers like CMC Markets can play a vital role here in terms of being able to offer high quality liquidity direct from some of the largest and most established names in the country across a wide range of assets. Furthermore, proprietary back office reporting systems provide a single, intuitive view exposure at any given time, whilst also being able to produce management and compliance reports in a user-specified format.
And whilst this may mean using a CFD to gain the necessary economic exposure, it’s important to remember that this is an increasingly common choice amongst institutions of all sizes. As prime brokers become more selective and stock borrowing costs rise, investors in the underlying fund are unlikely to offer much resistance to such a solution.