How to use this checklist

Ask each vendor to answer these questions in a demo, on your own data or a realistic sample — not in slides. Slides describe intended behaviour. A demo shows you what happens when a price is missing, a balance doesn’t match, or a share class needs its own NAV.

The questions are grouped in the order a hybrid fund usually feels the pain: first the book itself, then valuation, reconciliation, trading, connectivity, security and finally implementation and exit.

1. Book of record

2. Valuation and NAV

3. Reconciliation

4. Trading and compliance

5. Connectivity

6. Security and due diligence

7. Implementation and exit

Red flags

• The demo switches to a second screen, or a second login, for crypto.
• The crypto NAV comes from another system and is “combined” with the traditional NAV at month-end.
• Crypto balances are reconciled by exporting to a spreadsheet.
• The vendor can’t tell you which price source valued a given token yesterday.
• Security assurance is described as “in progress” with no date, or audit logs are described as immutable.
• Migration is offered only as a hard cutover, with no parallel run.

If the answer to “how do you produce one NAV?” involves combining two outputs, the fund is running two books.

Frequently asked questions

What is a hybrid fund in portfolio management terms?

A fund, or a group of funds run by one manager, that holds both traditional assets — such as equities, bonds, FX and derivatives — and digital assets such as spot crypto, stablecoins, perpetuals or staked positions.

Can a traditional PMS handle crypto?

Some add digital assets through a separate module or a third-party integration. The question to ask is whether crypto positions sit in the same book, valuation cycle and reconciliation workflow as everything else, or in a parallel system that has to be reconciled back.

What is the most important question to ask a PMS vendor as a hybrid fund?

Whether traditional and digital assets are valued and reconciled in the same daily cycle to produce one NAV per share class. If the answer involves combining two outputs, the fund is running two books.

Should vendors answer the checklist in a demo?

Yes. Ask them to demonstrate answers on your own data or a realistic sample. Slides describe intended behaviour; a demo shows how breaks, pricing sources and share-class NAV actually work.

The formula is the same. The inputs aren’t.

Net asset value is still assets minus liabilities, divided across share classes by units in issue. What changes in crypto is almost every input to that formula. There is no market close. The same token trades at different prices on different venues. Assets sit on exchanges, with custodians and in on-chain wallets at the same time. And some positions earn yield continuously.

The fund’s valuation policy defines how each of these is handled. The administrator and the auditor will test the NAV against that policy, so the goal isn’t a clever method. It’s a documented one, applied the same way every period.

This article describes common practice, not accounting or legal advice. Agree your valuation policy with your administrator and auditor.

1. Choose a valuation point

Crypto trades around the clock, so the fund has to choose the moment it values the portfolio: a specific time in a specific time zone, such as midnight UTC or 4pm London. That valuation point belongs in the offering documents and valuation policy, and it should be applied every period without exception.

Hybrid funds have an extra decision. If traditional assets are priced at their exchange closes and crypto at a different time, the NAV combines prices from different moments. On a volatile day that difference is material. Either align the crypto valuation point with traditional pricing, or document exactly how the two are combined.

2. Set a pricing-source hierarchy

Because venues disagree on price, the fund needs a rule for which price counts. Fair value standards (IFRS 13 and ASC 820) point to the price in the asset’s principal market — the market with the greatest volume and activity for that asset that the fund can access — or, where there is none, the most advantageous market.

In practice, the valuation policy records three things for each asset:

• A primary source — a named venue, or a reference rate or index.
• A fallback — what to use if the primary source is unavailable at the valuation point.
• A staleness rule — how old a price can be before it needs review.

Set the hierarchy per asset, not per fund. A large-cap token and a thinly traded one need different treatment.

3. Handle the awkward asset types

Stablecoins

Value them at their observable market price at the valuation point, not an assumed 1.00. The policy should say what happens if a stablecoin trades away from its peg.

Staked assets and rewards

Staked principal is valued like the underlying token, with any lock-up or unbonding period noted. Rewards need a clear policy on whether they are accrued as earned or recognised when received — practice varies, so agree it with the auditor up front.

DeFi positions

Liquidity-pool positions are usually valued through the underlying tokens the fund could claim at the valuation point. Lending positions carry principal plus accrued interest. Protocol risk is a separate question from valuation and belongs in the risk framework.

Derivatives

Perpetual futures are marked using a defined price — often the venue’s mark price, if that’s consistent with the policy — and funding payments must be booked as they accrue or settle. Options need either venue marks or a documented model.

Illiquid and delisted tokens

Don’t carry a last traded price indefinitely. Illiquid positions need a documented review, often by a valuation committee, with any adjustment recorded.

Airdrops and forks

The policy should say when newly received tokens are recognised, and how they’re valued before a reliable market price exists.

4. Prove the assets exist

Valuation assumes the fund knows exactly what it holds. For a crypto fund that means reconciling the internal book, at the valuation point, against every place assets sit: exchange balances (including sub-accounts) through their APIs, custodian statements, and wallet balances read directly on-chain. Breaks get resolved before the NAV is struck, not after.

This is where crypto funds most often fall short of institutional standard. Balances copied by hand into a spreadsheet may be right, but they leave no evidence trail for the administrator or auditor to follow.

5. Accrue fees and liabilities

Management fees, performance fees (with high-water marks, hurdles and crystallisation), trading fees, funding costs, borrowing costs and fund expenses all accrue as they would in a traditional fund. Crypto volatility makes performance-fee accruals swing more, and share classes with different fee terms or currencies each need their own calculation — which is why the NAV should be struck at share-class level, not only at fund level.

6. Strike, check, publish

For most funds, an independent administrator strikes the official NAV. The manager keeps its own book, strikes a shadow NAV on the same policy, and compares the two at share-class level before publication. Variances beyond tolerance are attributed to a cause — pricing source, timing, fee accrual — and resolved before investors see the number.

The goal isn’t a clever valuation method. It’s a documented one, applied the same way every day.

A checklist for your valuation policy

• Valuation point and time zone, and how it lines up with traditional pricing
• Pricing hierarchy per asset, with fallbacks and a staleness rule
• Treatment of stablecoins, staking rewards, DeFi positions, derivatives, airdrops and forks
• Procedure for illiquid or delisted tokens, and who approves adjustments
• Reconciliation sources — exchanges, custodians, wallets — and when they run
• Fee methodology per share class
• Tolerance for variances against the administrator’s NAV, and the escalation route

Frequently asked questions

What time do crypto funds calculate NAV?

There is no market close, so each fund sets its own valuation point in its valuation policy — commonly a fixed time such as midnight UTC, or a time aligned with the fund’s traditional pricing. What matters is that the time is documented and applied consistently every period.

Which price should a crypto fund use for NAV?

The price set by the fund’s documented pricing hierarchy. Fair value standards point to the asset’s principal market — the market with the greatest volume and activity that the fund can access — with defined fallbacks when that source is unavailable or stale.

Should stablecoins be valued at 1.00?

Not automatically. A stablecoin should be valued at its observable market price at the valuation point, with a documented approach for periods when it trades away from its peg.

How often should a crypto fund strike NAV?

The official NAV follows the fund’s dealing frequency, often monthly or weekly. Many managers also run a daily shadow NAV internally, because crypto prices and positions move continuously and problems are cheaper to fix the day they appear.

Who calculates the NAV of a crypto fund?

For most funds, an independent fund administrator strikes the official NAV. The manager typically keeps its own book and a shadow NAV to check the administrator’s figures before publication.

Why the acronyms get confusing

Vendors use the same terms for different things, and one system often plays several roles. The clearest example is “PMS” itself. At a large asset manager, a portfolio management system often means a front-office tool for modelling and rebalancing portfolios against a benchmark. At a hedge fund, it usually means the system that holds positions, cash, P&L and NAV — the book of record the whole firm works from. Both uses are correct. They describe different products.

The simplest way through the confusion is to follow a single trade from idea to investor report, and ask which system is responsible at each step.

Follow the trade

1. Decision. A portfolio manager decides to buy, after checking current exposure and P&L in the PMS.
2. Order. The order is raised in the OMS, checked against pre-trade compliance rules, and allocated across funds or share classes.
3. Execution. The order goes to a broker or venue — directly, or through an EMS if the trader needs algorithms and direct market access.
4. Capture. Fills come back. Positions, cash and tax lots update in the IBOR.
5. Reconciliation. The middle office matches the internal book against the custodian, prime broker and administrator.
6. Accounting and NAV. The ABOR — for most hedge funds, the fund administrator’s — books accruals and fees and strikes the official NAV.
7. Reporting. Investor, regulatory and performance reports draw on the books.

Each step can sit in a separate system, or several can sit in one platform. What matters operationally is the number of hand-offs between them, because every hand-off is an interface to maintain and a reconciliation to run.

What each system does

Portfolio management system (PMS)

The PMS is where the investment team sees the portfolio: positions valued in real time, exposure by strategy, sector and asset class, P&L and attribution, and what-if analysis. For hedge funds and most mid-sized managers, the PMS also holds the authoritative record of positions and cash, which makes it the IBOR as well.

Order management system (OMS)

The OMS manages the life of an order: capture, pre-trade compliance against regulatory, prospectus and internal limits, routing to brokers and venues (typically over FIX), allocation of block trades across funds, and an audit trail of who did what and when. Its users are portfolio managers, traders and compliance.

Execution management system (EMS)

The EMS is the trader’s tool for how an order is worked in the market: execution algorithms, direct market access, real-time market data and transaction cost analysis. Funds whose edge depends on execution need one. Many mid-sized funds trading listed instruments and digital assets work orders through broker algorithms and venue connections from the OMS instead.

Investment book of record (IBOR)

The IBOR is the up-to-date record of positions and cash that the investment team makes decisions from. It is kept on a trade-date basis, updates throughout the day, and includes activity that hasn’t settled yet. The question it answers is: what do we hold right now, and what can we act on?

Accounting book of record (ABOR)

The ABOR is the official accounting record: accruals, fees, corporate actions booked on an accounting basis, and period-end closes. It produces the NAV that investors subscribe and redeem at. For most hedge funds the ABOR is maintained by the fund administrator; at many traditional managers it sits with an internal or outsourced fund accounting team. The question it answers is: what is the fund officially worth at the valuation point?

The IBOR and ABOR describe the same fund, but for different purposes and on different timetables, so they rarely agree to the cent during the day. Explained differences are normal. Unexplained differences are breaks.

Side by side

Where the systems overlap

PMS and IBOR are commonly the same system at hedge funds and mid-sized managers. Splitting them makes sense mainly at large institutions that run a central data platform feeding several front-office tools.

PMS and OMS can be separate or integrated, and the difference shows up in daily operations. When they’re separate, fills cross an interface before positions update, and pre-trade compliance may check an order against positions that are already out of date. When they’re integrated, an executed order updates positions and exposure immediately, and every compliance check runs against the live book.

IBOR and ABOR are the pair that should stay independent. The value of having two books is that each checks the other. The manager reconciles its IBOR to the administrator’s ABOR, and increasingly runs a shadow NAV to verify the official figure before it’s published.

The cost of a fund’s systems isn’t the licences. It’s the number of hand-offs between them.

Which systems does your fund need?

• Emerging or single-strategy funds typically need a PMS with an integrated OMS acting as the IBOR, and an administrator holding the ABOR. A separate EMS is only worth it if execution style demands one.
• Multi-fund and multi-strategy managers need the same core, plus allocation across entities and NAV oversight at share-class level. At this size the number of interfaces becomes the main operational cost.
• Funds with a digital-asset sleeve need an IBOR that holds exchange, custody and on-chain positions alongside traditional ones. Otherwise the fund is running two books and reconciling them against each other. Our hybrid-fund PMS checklist covers what to ask.
• Large institutions with internal teams to own the interfaces can justify separate best-of-breed systems for each role.

Frequently asked questions

Is an IBOR the same as a PMS?

Often, but not always. At hedge funds and many mid-sized managers, the PMS holds the positions and cash the firm trades from, so it effectively is the IBOR. At large asset managers, the IBOR is sometimes a separate data platform that feeds several front-office tools, including a PMS used for modelling and rebalancing.

What is the difference between IBOR and ABOR?

The IBOR is the up-to-date investment view of positions and cash, used to make decisions during the day. The ABOR is the official accounting record, with accruals, fees and period-end closes, used to strike the NAV. They describe the same fund for different purposes, so they are reconciled rather than merged.

Does a hedge fund need a separate OMS?

It needs OMS functionality — order capture, pre-trade compliance, routing and allocation — but not necessarily a separate system. When the OMS is part of the same platform as the book of record, executed orders update positions and exposure immediately, and compliance checks run against live positions.

When does a fund need an EMS?

When execution itself is a source of edge: algorithmic or high-frequency strategies, heavy use of direct market access, or detailed transaction cost analysis. Most mid-sized funds trading listed instruments and digital assets work orders through brokers or venue connections from the OMS without a separate EMS.

Who owns the ABOR at a hedge fund?

Usually the fund administrator, which maintains the official accounting record and strikes the NAV. The manager keeps its own IBOR and, increasingly, a shadow NAV to check the administrator’s figures independently before publication.

What shadow NAV is — and isn’t

A shadow NAV is the manager’s own calculation of the fund’s net asset value, built from its own book and its own valuation, and compared against the administrator’s figure before that figure is published.

It isn’t a replacement for the administrator. The administrator’s NAV remains the official one, used for subscriptions and redemptions. Nor is it a copy of the administrator’s work. Its value comes from independence: a separate data path, separate pricing and separate fee calculations, so that an error in one calculation shows up as a difference against the other.

Why funds run one

The administrator’s NAV is built largely from data the fund and its counterparties supply. A mis-booked trade, a missed corporate action or a fee accrued on the wrong base passes straight into the official number unless something independent catches it.

Three pressures push managers to run that check themselves:

• Allocators ask. Operational due diligence questionnaires routinely ask who independently verifies the NAV. “We rely on the administrator” tends to open the topic rather than close it.
• Timing. The official NAV may be monthly or weekly. A daily shadow NAV gives the manager a verified view in between.
• Cost of late discovery. An error found on the day it happens is a quick fix. The same error found after publication can mean restating NAVs and correcting investor dealings.

How it works

1. Keep your own book. Positions and cash, reconciled daily against custodians, prime brokers and — for digital assets — exchanges and wallets.
2. Value it on your policy. The same valuation point and pricing hierarchy the fund’s valuation policy sets out.
3. Accrue fees and expenses per share class. Management and performance fees, with crystallisation handled per class.
4. Compare. Match the shadow NAV to the administrator’s NAV at fund and share-class level.
5. Apply a tolerance. Differences within tolerance are signed off. Differences outside it are investigated.
6. Attribute and resolve. Each variance is traced to a cause, resolved with the administrator, and recorded as evidence.

Setting tolerances

Tolerances are usually expressed in basis points of NAV and set per fund and share class. A simple, liquid strategy can hold a tighter threshold than one with hard-to-price instruments. Whatever the level, write down three things: the threshold, who reviews a breach, and whether publication waits until it’s resolved.

A worked example

Illustrative figures for a fictional fund. A share class has a NAV of €50 million. The administrator’s figure and the shadow NAV differ by 6 basis points — €30,000 — against a tolerance of 2 basis points. The difference is attributed before publication:

After the reprice and the fee alignment, 0.3 basis points remain — within tolerance, explained, and recorded. The NAV is published on numbers both sides can account for. Without the shadow calculation, the stale bond price would have gone into the official NAV unnoticed.

Detection is only half the job. A variance isn’t closed until it has a cause.

What it catches most often

The variances that recur are ordinary: pricing differences between sources or cut-offs, trade-date versus settlement-date timing, corporate actions, and fee or accrual errors. For digital assets, add venue price divergence and inconsistent valuation points — covered in how crypto funds strike NAV.

Four ways to operate it

• Rely on the administrator alone. Cheapest, but offers no independent check and tends to raise due diligence questions.
• In-house, on spreadsheets. Independent, but fragile: dependent on one or two people and weak on evidence.
• In-house, on a platform. The book of record is reconciled daily, the shadow NAV runs on a schedule, and every check leaves an audit-ready trail.
• Outsourced. A middle-office provider runs it on the manager’s behalf. Make sure the provider is independent of the administrator whose NAV it checks.

Frequently asked questions

Is shadow NAV a regulatory requirement?

Rarely as such. Requirements depend on the fund’s regime — frameworks such as AIFMD set expectations for proper and independent valuation — but shadow NAV is mostly driven by allocators and operational due diligence teams, who expect an independent check on the administrator’s figures. Confirm what applies to your funds with your compliance adviser.

How is shadow NAV different from the administrator’s NAV?

The administrator’s NAV is the official figure used for subscriptions and redemptions. The shadow NAV is the manager’s own independent calculation of the same figure, used to check the official NAV before it is published.

What tolerance should a shadow NAV use?

Tolerances are usually expressed in basis points of NAV and set per fund and share class, depending on how complex and liquid the strategy is. The threshold, and what happens when it is breached, should be written into the fund’s NAV oversight procedure.

Can the fund administrator run the shadow NAV?

It defeats the purpose. A shadow NAV is valuable because it is independent of the official calculation, so it should be run by the manager or by a separate provider, not by the administrator whose NAV it checks.

Does shadow NAV work for crypto funds?

Yes, with two extra points of care: crypto trades continuously, so the valuation point must be fixed and documented, and venue prices diverge, so the pricing source for each asset must be defined. Digital assets are then valued and reconciled in the same cycle as the rest of the book.

The challenge: several systems, none of them a real PMS

Before HedgeGuard, CIAM had worked with several software platforms and hit the same problems each time — unreliable figures, awkward processes, and customer service that didn’t match the price. Two requirements sat above the rest: a system that could finally serve as a genuine portfolio management system, and the ability to recover its historical data and rebuild its portfolio completely from inception. That made both the platform choice and the migration itself decisions the firm couldn’t afford to get wrong.

The move: an efficient migration, with history intact

CIAM migrated from its previous software to HedgeGuard. The migration was handled efficiently, and the portfolio was rebuilt completely from inception — the outcome that mattered most, and the one that had been hardest to achieve elsewhere. Rather than starting fresh and losing its track record, CIAM carried its full history onto the new platform.

The result: a partner, not just a platform

Years on, CIAM describes HedgeGuard’s real-time support as being as responsive today as it was during onboarding. For a firm of entrepreneurs, cost efficiency was a non-negotiable condition — and one reason the relationship has lasted. The lasting outcome is confidence: efficient processes, figures the team trusts, and a support team CIAM regards as an extension of its own.

With HedgeGuard we feel confident in our daily business thanks to efficient processes, right figures and a team we can rely on as an extension of ours.

— Catherine Berjal, CEO/CIO, CIAM

The challenge: choosing a system built for professional asset managers

Evarinvest evaluated several institutional portfolio management systems, weighing the flexibility modern investment management demands against the robustness a professional asset manager requires. The firm wanted one platform to hold its entire operation — not a core system surrounded by disconnected tools — while giving its compliance team the transparency and operational controls to trust it.

The solution: one platform, front to back

HedgeGuard centralized Evarinvest’s investment operations in a single system, bringing together workflows that had previously lived apart:

• Portfolio management and trade processing
• Cash reconciliation and NAV oversight
• Performance reporting and investor reporting
• Transparency and operational controls for compliance

A key differentiator was the pairing of institutional-grade technology with dedicated client support — an implementation team that customized workflows, integrated custodians and external data providers, and accommodated evolving requirements, turning the platform into a long-term partner rather than a piece of software.

The result: operations that recede into the background

With portfolio management, reconciliation, NAV, and reporting running in one place, operational complexity stopped competing for the team’s attention. HedgeGuard became a critical part of Evarinvest’s infrastructure — the platform the firm now recommends to hedge funds, family offices, and asset managers looking for a modern, scalable PMS and an outsourced middle office in one.

It has become a critical component of our operational infrastructure and has enabled us to focus on generating investment performance rather than managing operational complexity.

— [Name, title], Evarinvest