HFMWeek Catches Up with Eze Castle Integration’s Managing Director, Vinod Paul, To Discuss How Technology Can Help Tackle the Challenges Facing Hedge Fund Start-up Firms.
HFMWeek (HFM): Are you seeing a healthy market for new hedge fund launches in the US?
Vinod Paul (VP): 2013 and 2014 were very strong years for start-ups in the US. Our US pipeline is also quite healthy for 2015 in terms of start-ups, which is a little different to Europe, where there aren’t as many launches. In terms of overall US business, 50% of the clients we brought on in 2014 were start-ups; this is up from 40% in 2013. There are several factors that have contributed to this, some that we cannot control, such as how the wider market performs. Institutional money coming back into the market is causing some of the start-up activity. Many of the start-ups we have been able to bring on were funded by larger institutions. HFM: How are today’s start-up funds different than those from five years ago?
It’s been quite a year, and as always, it’s hard to believe it’s over. In 2014, Hedge IT continued to thrive in its goal to provide advice and insight into hedge fund technology and operations. The financial services industry is evolving at a rapid pace, and we’re evolving our topics and conversations to keep up. Across 100 blog posts this year (not including this one), almost half of them – 49 to be exact – addressed the topic of security, which is undoubtedly one of the single most important focus areas for hedge funds and investment firms today. In addition to security, we covered everything from tips for starting a hedge fund to avoiding cloud mistakes to hiring for IT roles.
Looking ahead to 2015, we plan to keep the conversations tuned in to what really matters to hedge funds when it comes to technology, and we’ll share as much content as we can in as many formats as we can. But before we get too ahead of ourselves – it’s not quite 2015 yet – let’s take a look back at 10 of our most popular blog posts from 2014.
If you’re one of the seemingly few firms who has yet to make the move to the cloud, it could be for a variety of reasons. Perhaps you want to maintain total control of your IT environment. Or maybe you’re waiting for a tech refresh to motivate you. Alternatively, it could be that you just haven’t made the proper case to management for switching to the cloud – and many times the one who really needs convincing is the Chief Financial Officer (CFO).
If you’re the Chief Technology Officer (CTO) or IT Manager, your responsibility is determining the infrastructure choices that are going to best suit operations at your firm. But those priorities may not line up exactly with those of the firm’s CFO. IT doesn’t always have insight into the financial ramifications of an operations decision of this magnitude. Instead they are typically focused on the other benefits including personnel reallocation, workflow efficiencies, etc.
The CFO, on the other hand, is ultimately tasked with ensuring the company’s financial decisions are appropriate, and therefore, it’s often advantageous to at least attempt to speak his/her language when pushing for an IT change.
If you’re a loyal Hedge IT reader, you may remember we highlighted a few simple dos and don’ts a few months ago that, when utilized, can go a long way in shoring up your firm’s security. To make it easy, we’ve put these tips together into a video. Take a look below and discover a vast range of security tips and tricks from email encryption to proper security measures for protecting computers and mobile devices.
Less than ten short years ago, Eze Castle Integration saw a shift in the market and gap in the cloud space. Firms had to hire multiple third-party vendors to fully outsource their IT needs, public cloud environments fell short of hedge fund security demands and service level contracts varied drastically. Fast-forward to today, and that very same spark of ideation has progressed to completely revolutionize hedge fund IT. In the spirit of Throwback Thursday, today we're reflecting on the journey and growth of our very own Eze Private Cloud.
In 2005, Eze Castle built and deployed the first hosted cloud platform for a large hedge fund based in New York City. By 2007, 18 funds spun out from the initial firm, each selecting Eze Castle as their trusted cloud platform provider. The following year, the company began building the foundation for the Eze Private Cloud. The same year marked the opening of Eze Castle’s hedge fund hotel in New York City. The environment, which supported more than 200 users, united the company’s cloud computing platform and fully managed office suites for startup funds.
As technology changes, it can become overwhelming to keep up with. That’s why we’ve decided to take a step back in today’s blog article to go over some of the basic vocabulary involved in cloud computing. Here are 10 terms to get you started:
Services or applications that are hosted in a web-based repository known as the “cloud”; the service is often hosted by a third-party provider who then provides access to that service to users on an on-demand basis via a network connection. This alleviates that firm from having to purchase and maintain costly infrastructure in-house.
A facility used to house computer systems and associated components, such as telecommunications and storage systems; typically includes redundant or backup power supplies, redundant communications connections, environmental controls and security features. The Update Institute classifies data centers into four tiers based on the percentage of availability and uptime.
The results from our Global Hedge Fund Technology and Operations Benchmark Study are in and here is a snapshot of the 2014 findings. You can find the complete report here. We surveyed 279 buy-side firms across the United States, United Kingdom and Asia in order to discover their front, middle, and back office technology and application preferences.
Respondent Profile[Hedge Funds by Type]All survey respondents fell into the following categories within the financial industry: hedge fund (58%), asset/investment manager (13%), private equity firm (3%), fund of fund (3%), and family office (3%). Additionally, 13 percent fell into an ‘other’ category, which included financial firm types such as venture capital, advisory, fund management, quant and wealth management.
Firms surveyed fell into three asset groups: thirty-three percent (33%) reported their assets under management (AUM) as less than $100 million; twenty-eight percent (28%) fell between $101 and $500 million; and the majority (39%) reported over $500 million AUM.
In regards to investment strategy, long/short equity continues to dominate as the most favorable with 50 percent (50%) of respondents reporting this to be their primary investment strategy. Additional preferred strategies include credit (8%), fixed income (6%), emerging markets (5%), event driven (4%), and distressed debt (3%). Twenty-four percent (24%) of firms fell into an “Other” category that included a wide variety of investment strategies such as commodities, derivatives, merger arbitrage, relative value, securities, global macro, and long only. In 2014, the top primes employed by firms are Goldman Sachs, Morgan Stanley, JP Morgan, Credit Suisse and UBS (same as 2013 results).
In it's fourth year running, our Global Hedge Fund Technology Benchmark Study reveals the top technology systems and applications used by investment management firms around the world. And while we aren't due to officially release the results until tomorrow - register for our webinar to hear them live - we thought we'd share a little sneak peek in the form of an infographic.
Take a look below and discover how your hedge fund and investment management firm peers are using technology to power their firm operations.
Categorized under: Hedge Fund Due Diligence Launching A Hedge Fund Cloud Computing Security Hedge Fund Operations Hedge Fund Regulation Infrastructure Communications Outsourcing Software Trends We're Seeing Videos And Infographics
Last week, we co-hosted another exciting Hedge Fund Startup event with KPMG in New York and had a great turnout of fund managers looking to learn more about everything from legal and tax implications to technology must-haves and capital raising strategies.
Since technology is clearly our forte, we wanted to share some of the key takeaways from our “Achieving Institutional-Grade IT” panel, featuring speakers from Evercore Partners, Bank of America Merrill Lynch and, of course, Eze Castle Integration. Here are the highlights:
State of Emerging Manager Market
The hedge fund startup market is healthy, and investors’ appetite for emerging managers is strong
Investors are attracted to nimbler, hungrier nature of emerging managers.
Key Priorities for Startups in 2014/2015
Select the right service providers to support your business.
Understand your firm’s vulnerabilities and exposures.
The operational due diligence process is changing, therefore firms need to understand the protections they have in place to secure investor assets.
Over the years, cybercrime has evolved, matured and increased in frequency. Target groups vary from case to case and victims range from big merchants and high-end retailers to celebrities and common folk. On the eve of Halloween, we’ve dug up some of the scariest cyber-attacks in 2014.
One of the more innovative hacks in recent years started making headway in Great Britain in September 2013. CryptoLocker utilizes malware to encrypt and freeze victims’ sentimental and valuable files on infected computers. After successfully locking the computer, a ransom note appears on the victim’s screen demanding money in return for their files. If the victim fails to make payment, the computer remains locked and files are unsalvageable.
More than $100 million in losses were attributed to the cybercriminals’ schemes as well as hundreds of thousands of infected computers. Computer security companies estimate that CryptoLocker infected over 234,000 computers worldwide, including more than 100,000 in the United States.