Regional Sites

Fund Services

Long/Short Fund Services

When it comes to long/short funds, you need the expert guidance of an experienced advisor, one familiar with the fine print of your fund valuations, and a leader in administration, accounting and reporting.

We offer solutions for long/short funds across a spectrum of services—individually, grouped or linked end to end.

Click on the links below to download J.P. Morgan's Long/Short Guide for Fund Administrators.


Fund Accounting
Compliance Monitoring
Performance & Risk Measurement
Securities Collateral Management
Derivatives Collateral Management
Global Custody
Trust & Fiduciary Services
J.P. Morgan Global Derivatives Services
Long/Short Trading Services

 

Fund Accounting
Long/short fund administrators are typically geared up to handle the valuation of their long positions. However, valuation of the 130/30 portfolio is more complex. Models range from almost wholly synthetic to a hybrid of synthetics and physical long positions. The valuation of these positions-and reconciliation with prime brokers-can be quite a challenge. We can help you handle administration, accounting and reporting for all aspects of your long/short strategy.

Our service includes:

  • Proven abilities in the administration of physical securities
  • Standard vendors' source valuations, dividend rates and corporate action terms
  • Independent valuation of portfolios held with prime brokers
  • Full reconciliation with prime brokers
  • Integration with other J.P. Morgan products, such as Compliance Reporting Services
  • Comprehensive portfolio reporting through our Web portal, JPMorgan ACCESSSM

Back to Top ^


Compliance Monitoring
Automated compliance and risk monitoring technology has become an essential part of the daily risk management process for fund managers, insurance companies, trustees and plan sponsors. But most in-house solutions are not designed to handle the sophisticated requirements of long/short portfolios and do not adequately address global risk exposure.

We offer a comprehensive compliance reporting service designed specifically to track global risk exposure for long/short funds.

Our service:

  • 'Looks through' derivative positions to the underlying assets
  • Calculates gross or net risk exposures on a daily basis
  • Nets derivative positions
  • Accepts multiple third-party data feeds (e.g., prime brokers)
  • Aggregates feeds to address securities lending and derivatives collateral positions

Back to Top ^


Performance & Risk Measurement
Setting risk-adjusted performance objectives is a key element of your long/short strategy. You need to clearly define benchmarks and set appropriate risk limits per asset class, country, and credit rating. Where external managers have been appointed, it is important to manage individual performance within your defined risk limits, and track not only the performance but also the investment guidelines of the fund. Risk limits, as well as measures such as value at risk (VaR), help determine how much risk external managers are taking in order to beat the benchmark.

We combine many unique capabilities to provide a flexible, customized service:

  • Comprehensive reporting
  • Expert staff with extensive experience in performance measurement
  • Over 6,500 institutional portfolios representing approximately $1.5 trillion in assets
  • Diverse client list that includes corporate and public DB/DC pensions, investment managers, endowments and foundations, corporate cash, insurers and central banks

Back to Top ^


Securities Collateral Management
Long/short fund managers using repos or securities lending for their short positions must address a unique set of collateralization issues.

Our collateral management services provide:

  • A proprietary engine to efficiently allocate collateral across your obligations
  • Internal collateral movements free of settlement risk
  • Optimization of collateral to reduce inventory
  • Adherence to risk parameters through sophisticated collateral testing
  • Same-day positions reporting and daily mark to market
  • Enhanced efficiency and reduced administration
  • Flexibility to accept a wide range of securities

Back to Top ^


Derivatives Collateral Management
Appointing a third-party collateral management agent is an effective way to help you manage the collateral needed for securities lending or derivatives counterparties.

As your collateral management agent, we offer:

  • Ability to accept equities and deliver out cash
  • Systems integrated with our other products and services
  • Rehypothecation structures that optimize collateral and minimize funding costs
  • Secure operational environment, providing a full audit trail
  • Robust framework to manage counterparty credit exposure

Back to Top ^


Global Custody for Short Trading Positions
Fund managers can gain significant benefits by choosing a global custodian that can provide automated settlement, custody and asset servicing of both components of a long/short portfolio. The advantages include consolidated reporting, improved transaction flow, the ability to exploit synergies between your long and short components, and enhanced risk and operational control.

Our flexible, integrated custody service supports your expansion into physical short selling.

Global Custody

  • Electronic processing of short positions via SWIFT or our proprietary Web-based system, JPMorgan ACCESSSM
  • Trade initiation and reporting
  • Unparalleled control and detailed tracking of all positions
  • Emphasis on straight-through processing, including prematching where applicable, and commitment to upgrade as each country's support for long/short strategies evolves

Asset Servicing Capabilities

  • Efficient tracking of entitlements and liabilities from corporate actions
  • Electronic advice on voluntary corporate actions
  • Entitlements or liabilities added to segregated positions

Back to Top ^


Trust & Fiduciary Services (for UCITS funds)
The role of the trustee or depositary in regulated funds is well understood when it comes to long-only investments. However, some unique challenges arise when you adopt a shorting strategy.

If you use a prime broker, your trustee or depositary will want to ensure the fund maintains control of any underlying assets, and needs to be assured that liquidity and collateral management do not inhibit discretionary buying or selling of stock. When you establish new counterparty relationships, your trustee has a regulatory obligation to review the contracts, helping you protect investor interests and ensure independent valuations are obtained.

We are the largest provider of trust and fiduciary services in Europe:

  • Over 1,500 funds in excess of USD one trillion in assets as of 2007 year-end
  • Operating from seven global locations
  • Provide consultative services, including regular bulletins
  • Tailored monitoring programs include desktop checks and site visits

Back to Top ^


J.P. Morgan Global Derivatives Services
The 30/30 (or equivalent) portion of your long/short portfolio may include a combination of physical assets, on-exchange derivatives and OTC derivative positions. While valuation of your physical and on-exchange positions is relatively straightforward, OTC derivatives present some unique challenges. With no liquid secondary market or benchmarks to rely on, you have to consider alternative ways to value your holdings.

We established our Global Derivatives Services unit to provide centralized solutions to these challenges, drawing on firmwide expertise to form an OTC derivatives center of excellence.

Our service offers:

  • Quick entry into a broad range of OTC derivative instruments
  • Access to industrial-strength systems architecture
  • Reduced up-front investment in people and systems
  • Full integration with our other products and services

Back to Top ^


Long/Short Trading Services
When you physically short, you need the ability to borrow securities to satisfy settlement requirements. This requires cash or securities collateral. When you put up cash, the lender reinvests it and rebates only a portion of that income. With securities as collateral, the lender charges a basis point fee on the notional value of the borrowed securities.

We offer an innovative complementary service for our custody clients that offers a cost-competitive alternative for securities sourcing:

  • Equity short positions are covered from your custody accounts, or externally through J.P. Morgan Securities Inc.
  • Uses long securities positions or cash as collateral to cover borrowing requirements
  • Legal documentation works in conjunction with your global custody agreement
  • Offers short trading anonymity
  • Provides access to a full range of instruments through J.P. Morgan Securities Inc.
  • Helps you reduce or eliminate transparency and market spreads
  • Comprehensive administration service is integrated with our other services

Back to Top ^
Up

Copyright © 2013 JPMorgan Chase & Co. All rights reserved.