An Interview with William
Vastardis, President of Vastardis Capital Services™
What types of clients do you serve?
Our traditional clients are medium-sized fund companies, including large
asset management firms that mainly manage separate accounts but also
offer some fund products. We provide these clients with customized fund
administration or operations support that spares them the expense and
hassle of an in-house staff. They can focus resources on developing their
investment capabilities.
A growing part of our business is investment
operations outsourcing for endowments and foundations. We've found that
medium-sized endowments and foundations face many of the same operational
issues as the for-profit money managers we've traditionally handled. Our
services let them hand over some or all of the operational aspects of
managing their investments to Vastardis Capital, from dealing with the
custodian to calculating performance and preparing reports for the board
of trustees.
How does Vastardis Capital uniquely solve problems
for endowments?
We give them access to sophisticated portfolio accounting systems and
operations expertise at a price they can afford, and free up resources to
strengthen their investment team. Endowment and foundation investing has
become a lot more sophisticated in recent years. The accounting and
performance issues of alternative asset classes such as private equity
investments, real estate and derivatives are considerable. Yet many
college endowments are so constrained by their budgets that they have to
rely on the college-wide standard general ledger system to track their
portfolios.
How do smaller fund companies benefit from hiring
Vastardis Capital?
Outsourcing to Vastardis Capital makes sense for smaller firms because
they can "rent" our expertise and technology without worrying
about managing the back office. And they can call on our expertise at any
time. Since we take away the hassle of managing operations tasks, senior
managers at smaller firms can devote their attention to portfolio
management. After all, that's how they grow their assets and where they
stake their reputations.
Maintaining an in-house fund oversight or
administration team only makes sense for large fund companies, such as
Vanguard, where I worked for 13 years. They can afford to maintain a
staff and the systems to support them, because they can spread the costs
over their huge asset base. If they choose to outsource these services,
they have the clout to demand attention from the big custodian banks.
How did your experience at Vanguard prepare you?
I started as a fund accountant at Vanguard in the late 1970's when there
were less than 100 employees, and ended up a vice president and head of
the private label fund administration group. When I left in 1992, there
were about 3,000 employees. I'm proud to have helped grow a mutual fund
powerhouse.
What led you to start Vastardis Capital?
I wanted to repeat our success with the Private Label Group at Vanguard.
I saw an opportunity to offer the same high-quality fund administration
and oversight services on an outsourced basis to the smaller fund groups
that big service providers don't take very good care of. I believe the
partnership of a boutique investment operations firm and a medium-sized
investment organization is a win-win situation, both from an operational
and a financial standpoint.
Besides helping clients become leaner and more
focused, how does Vastardis Capital win?
Vastardis Capital wins because we can hire first-class operations people
and create a career path that allows us to retain them. Smaller
investment management firms, whether they're for-profit or
not-for-profit, can't offer much professional growth to their back office
staff. The prestige jobs are in portfolio management, and the junior
person who's hired to track performance soon gets itchy to move on to the
investment side. The turnover is very high for these support positions.
Operations is the core of our business, so we
attract people who want to increase their mastery of accounting,
compliance and regulatory issues. We are a young firm, but the
credentials of our staff are impressive: CPAs, MBAs and JDs with years of
experience in investment operations.
Why should a client pick Vastardis Capital for
fund administration over a large fund service provider?
We offer a few advantages over the fund administration services the big
custodian banks provide. First, fund administration is a core business
for us, so clients are confident they are receiving our full attention.
Our larger competitors often view fund administration as a secondary
line, behind custody and fund accounting. Second, the big banks gear
their services to their biggest clients. If you're not in that group, you
have to accept a "one size fits all" approach. Their services
may be cheaper than ours, but they don't provide the tailored,
personalized approach that we do. Third, we offer intelligent, adaptive
use of the most current technology. Many large providers are burdened
with outdated software and hardware, and can't adapt their information
systems to change as quickly as we can.
Why do you call Vastardis Capital an investment
operations "boutique"?
We prefer to work closely with clients to customize our services to their
needs, much like boutique investment firms specialize in a limited
universe of strategies which they offer to a small set of investors. Our
vision is not to serve every firm in the investment business. Our clients
appreciate being part of a select group, and treat us as their partners.
Because we manage growth very carefully, our senior management staff is
readily available when our clients need them. Our clients present lots of
interesting issues, and we love finding creative solutions to these
challenges.
How is Vastardis Capital's approach to technology
unique?
As a new firm, we are fortunate not to be burdened by legacy systems that
have been endlessly tweaked and reworked. Our approach is very flexible.
We maintain an in-house data warehouse that is a single source for clean,
validated data. We then take a best-of-breed functional approach,
employing industry-leading applications for specific purposes. For
instance, we use The Burgiss Group's Private-i® to track private equity
investments and Charles River Development's compliance module. We're
always looking at new software. And if we can't buy the right software,
our technology staff builds it.
What services don't you offer?
We don't offer services that involve heavy processing, like those
required for daily priced mutual funds. Fund accounting and transfer
agent services for such funds are ideally suited to the custodian banks.
We don't do extensive front-end trade order entry, although for the right
client we would partner with a firm that specializes in trade processing
management. Also, given the heavy time commitment, we only fill the
principal financial officer and chief compliance officer roles for
clients with whom we have taken on more administration or operations
responsibility.
