BNY Mellon Alternative Investment Services (AIS) has introduced enhanced accounting and reporting functionality for side pocket accounts and special purpose vehicles (SPVs).

According to the company, the new service will offer hedge fund managers greater flexibility in structuring their funds and managing illiquid or long-term assets.

Delivered via BNY Mellon’s proprietary fund accounting platform, Praeeo, the automated service will enable fund managers to segregate illiquid investments. Capital and/or earned income, along with applicable profit-carry forward, can be automatically moved from the side pocket to the main or ‘trading’ portfolio, giving fund managers more ways to manage realized events within the side pocket.

The enhanced functionality is supported in both share- and capital-based hedge fund structures. More than 50 funds with special purpose vehicles and side pockets are currently using the new service.

Rick Stanley, head of product management for BNY Mellon AIS, said: “Hedge fund clients utilize side pockets and SPV structures in a variety of ways. Some use them to support share classes invested in long-term assets as an investor option, while others might segregate illiquid investments as part of a fund restructuring due to market conditions.

“Whatever the need, this new service offers clients more options and improved operational efficiency in managing capital flows between their main and side pocket holdings.”