Paladyne Systems and Sungard have teamed up to create a hosted front to back office operations platform targeted at start-up and small to medium sized hedge funds.

The platform brings together SunGard's Visual Portfolio Manager software and Paladyne's ASP applications for hedge fund managers.

The parties said the new service would give start-up hedge fund managers access to operational infrastructure on a par with that of established $5bn plus fund managers at a fraction of the cost.

According to Paladyne a hedge fund management company would have to spend in excess of $1m to create an IT infrastructure with the functionality of what the firm was offering on an ASP basis.

"Paladyne is taking a $1m plus technology and operations solution down market and offering it at a fraction of the cost to implement.  It would be cost prohibitive for a start-up hedge fund to implement this on its own. Usually, hedge funds tend to rely on cobbling together spreadsheets and adding one solution at a time - such as an order management or accounting platform - on a piecemeal basis. Paladyne brings to market a fully integrated out-of-the-box solution that grows with a hedge fund, even when they reach the $10bn plus size," said Sameer Shalaby, CEO of Paladyne Systems.

Emanuel Mond, president of SunGard's alternative investment business, said the ASP model was gaining popularity in the hedge fund sector.

"In the current environment, where hedge funds want the functionality of a robust accounting platform, yet do not have the infrastructure to support an in-house system, an ASP model is very appealing," he explained.

Paladyne also offers Advent Geneva as a hosted portfolio accounting platform.

Operational infrastructure has become an important consideration for pension funds and other institutions investing in hedge funds. For instance, nearly two thirds of institutional investors responding to a State Street survey last year said they were concerned about valuation practices in the hedge fund industry.