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Tips for Optimizing Hedge Fund Operations & Reducing Costs

By Kaleigh Brousseau,
Thursday, July 29th, 2010

Welcome back! Have you read Parts I and II of our Hedge Fund Operations analysis already? If so, you’ve already learned some great tips for how to optimize your hedge fund’s operations when it comes to staffing, technology, managing counterparties and budgeting. So what’s next?

We’ve developed a checklist for you and outlined six new ways to make your operations more efficient and help you save money. Are you ready?

Virtualization Technology

  • Consolidate. Combine multiple servers. This will increase your floor space and reduce your power and cooling expenses as well as your hardware & software costs.

Purchasingbudgeting image

  • Think ahead. Purchase multi-year software licenses, and you can usually get a discount. You can also buy hardware in bulk. Even if you don’t need a dozen PCs or printers, you will end up paying more out-of-pocket if you order at the last minute.

  • Be resourceful. Take advantage of vendor relationships. Buy in bulk, when possible, and ask about rebates and/or special incentives that could reduce costs. You can also inquire about blanket discounts. You might be able to make an arrangement in which all purchases within a certain timeframe are locked in at standard prices.                       

  • Evaluate. Take a close look at your internal requirements and whether you need all the functionality that each service and product offers. In most cases, your service provider can give you a standard package, and upgrades can always be made at a later time.

Market Data

  • Evaluate again. Firms can pay upwards of $2,000 per month per user for access to market data such as Bloomberg’s, which typically does not support the ability to parse down features and functionality based on a user’s need. Firms might want to evaluate other vendors, such as Thomson Reuters, in an effort to find a service that is more flexible and could reduce costs.

Telecommunications

  • Just ask. It can’t hurt to ask your telecommunications provider if there are any ways to reduce costs. Of course, they want your business, but they also want you to remain a valued and satisfied customer. So they will often go out of their way to help you lower your telecomm bill if you ask them to.

  • Try WAN Optimization. WAN optimization can often reduce costs for a firm in the long-run. Vendors such as Riverbed Technology offer premium, but cost-effective, optimization solutions that can reduce network traffic, thereby lowering bandwidth costs.

Broker Execution

  • Research. Many broker services have been offering lower costs to firms since the recession hit. Do your research and negotiate prices, and you might find more financial room to work with.

Disaster Recovery & Data Protection

  • Take a phased approach. While we don’t recommend that a firm operate without data protection and backup in place, it is possible for firms to take a phased approach with their disaster recovery deployment. Focus on protecting business critical applications. You can always upgrade later when more resources become available.

To learn more about ways you can increase efficiency and reduce costs at your firm – without sacrificing performance – contact us directly.

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Photo Credits: Flickr

Categorized under: Hedge Fund Operations  Disaster Recovery  Hedge Fund Due Diligence  Trends We're Seeing 



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