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
| Ask the vendor | A good answer |
|---|---|
| Are traditional and digital assets held in the same book of record? | Yes: one position store, one valuation engine, one P&L. Not a crypto module that syncs into a traditional book. |
| Can a single fund or share class hold both? | Yes, without separate fund structures or a second system for the crypto sleeve. |
| How does a crypto sleeve appear in investor reporting? | In the same report as everything else, not as an appendix produced elsewhere. |
2. Valuation and NAV
| Ask the vendor | A good answer |
|---|---|
| Can the valuation point and pricing source be set per fund and per asset? | Yes, with fallbacks and a staleness rule, and a record of which source was used each day. |
| Is NAV calculated for both asset types in one cycle, at share-class level? | Yes: one NAV per share class, not two figures combined at month-end. |
| How are stablecoins, staking, DeFi positions and perpetuals handled? | A specific answer for each type, consistent with your valuation policy. See how crypto funds strike NAV. |
3. Reconciliation
| Ask the vendor | A good answer |
|---|---|
| Which sources are reconciled? | Custodians, prime brokers and the administrator, plus exchanges (including sub-accounts), crypto custodians and on-chain wallets. |
| Is reconciliation three-way? | Custodian, administrator and internal book matched against each other, with no single source assumed correct. |
| What happens to a break? | It is raised with an owner, aged, and resolved with an evidence trail you can export. |
4. Trading and compliance
| Ask the vendor | A good answer |
|---|---|
| Can one order blotter handle both asset types? | Yes, under the same compliance rule set and the same audit trail. |
| Do pre-trade rules see digital-asset exposure? | Concentration, leverage, prospectus and eligibility limits are tested against total exposure, including crypto held directly or through instruments. |
| How are venues connected? | FIX to brokers and prime brokers, REST and WebSocket APIs to exchanges, and file ingestion for counterparties without an API. |
5. Connectivity
| Ask the vendor | A good answer |
|---|---|
| Which exchanges, custodians and administrators are connected today? | A named list, plus a clear process and typical scope for adding new ones. |
| What happens when a feed fails? | It is flagged as an alert rather than silently skipped, and backfilled where the venue supports it. |
6. Security and due diligence
| Ask the vendor | A good answer |
|---|---|
| What independent security assurance do you have? | A current SOC 2 Type II report or equivalent, available to you under NDA. |
| Where is data hosted, and who can access it? | A named hosting region, role-based access, and encryption at rest and in transit. |
| How is disaster recovery tested? | On a fixed schedule, with results you can review during due diligence. |
| What audit trail does the system keep? | An audit-ready, exportable record of every check, override, break and resolution. |
7. Implementation and exit
| Ask the vendor | A good answer |
|---|---|
| Can our historical data be migrated? | Positions, transactions, prices and NAV history migrated and reconciled against your records before go-live. |
| Is there a parallel run? | Yes: your current system stays live until you’ve signed off the reconciled numbers. |
| If we leave, how do we get our data back? | A contractual commitment to return your data in a usable format, and to delete it afterwards. |
| Who runs the platform day to day? | Your team, or an outsourced middle office on the same platform that you can bring in-house later. |
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.