Today’s post 2008 investor shines opportunity for hedge funds, but running this business is sometimes not uniform.

With the Bernie Madoff ponzi scheme a closed chapter, and three years after the onset of possibly the world’s worst financial crisis, hedge funds are on the rise again. This time, they’re forced to have top-notch service providers in addition to manager talent to become “institutional quality.”

“Institutional quality is that special sauce that every small manager is looking for,” according to Sherif Elmazi, head of operations and fund administration at Pulse Capital Partners, a specialized alternative asset management firm focused on hedge fund seeding and customized portfolio and business solutions.

“I think institutional quality can be simply defined as controls,” Elmazi said. “As an investor, they want to see that adequate controls are put in place to oversee all operations.”  Though, many managed account platforms are able to outsource “controls” and still seek institutional hedge-fund status, he said.

For Elmazi, another key strategy for smaller managers is not necessarily partnering with “name brand” administrators, but rather those with “low turnover,” ensuring that employees are “happy.”

Unlike the U.S. hedge fund market, Canada emerged less unscathed from the financial crisis, perhaps due to the nation’s long history with principles-based regulation, which some may argue, shield Canadian hedge funds from high, necessary compliance costs.

Yet, for U.S. based hedge fund seeders and compliance officers, searching for prospective hedge funds in Canada may prove to be difficult.

“One of the managers we’re dealing with (in Canada) has been relatively successful in raising capital, but they’ve been opaque in dealing with regulators,” according to an unnamed due diligence officer. “I don’t see a lot of the same infrastructure requirements that we have here in the U.S., so it can be tough to dig deep and find where there is redundancy.”

Regulatory differences between the U.S. and Canada are a known issue by many market participants.  As U.S. based due diligence officer “more in line with what U.S. regulators want,” the source described investing best operational standards on Canadian managers in need of capital as a “big hurdle.”

Although the Canadian start-up hedge fund climate reportedly may not be as robust as it is in the U.S., there are specific strategies gaining popularity.  Investors are eyeing notably CTA (commodity trading advisors), said the source.