Following is the second part in a two-part guest post from Branden Jones, Global Head of Marketing at Liquid Holdings Group, Inc. based in New York, NY. To read Part One, click here.
In this age of data management—this new state of cross-office functionality—operational models must be able to house, curate, and level-off information sets as they happen. Funds must not only actively manage a growing universe of market data but also tackle performance reporting, risk projections, disaster planning, and partitioned client data.
To successfully, and simultaneously, manage these activities, funds must have a data operational model that supports automation, where it makes sense:
- Continuous processing, as an underlying system
- Consistent normalization, across the board
- Historical, since inception view
- Defensive measures, to protect the operation
Real-time, continuous actions are the new normal in today’s hedge fund reality. Funds are expected to understand, identify, and take advantage of opportunities as they occur. However, from a data standpoint “real-time” is only a point on a larger continuum of activity that occurs when a participant observes or captures a single event in time. Continuous processing is the underlying current that accepts and captures, or rejects data inflows and outflows. As pressures increase from both investors and regulators, managers should rely on continuous, automated services, processes, and technology to support their business, not only as a viewable segment, but constantly, throughout the lifespan of the fund.
Following is the first part in a two-part guest post from Branden Jones, Global Head of Marketing at Liquid Holdings Group, Inc. based in New York, NY.
This is the year for big data. Across industries, firms have unprecedented amounts of both public and private information sets – from user profiles and consumer habits to business outputs and proprietary algorithms. But access to data, or information at large, does not guarantee a valuable yield. Jonathan Shaw, managing editor of Harvard Magazine notes, “The [data] revolution lies in improved statistical and computational methods, not in the exponential growth of storage or even computational capacity.” Data is ubiquitous but not intrinsically valuable – it needs to be smartly processed, not just farmed.
For hedge funds, data processing is the quiet, invisible process that moves through the trade lifecycle—accessed from external entities like exchanges and brokers, modified and adjusted in execution, and at times, frozen in snapshots for an increasingly complex group of investors and regulators. More operational credibility and regulatory compliance is required than ever before, with increased scrutiny of the secret buy-side manna that goes along with it.
Smarter data management can be expensive and time-consuming as funds seek to keep up with regulatory, compliance, and transparency requirements while navigating through a sea of market opportunities. Good fund management starts and ends with precise, accurate data management. Truly taking advantage of data, and smarter computational methods, requires not only shedding the skin of outdated models, but categorically understanding a whole new data ecosystem, with new methods of processing, through selective automation and augmented observation. Once that new data ecosystem has been embraced, fund managers can spend their time mastering alpha generation and capital building initiatives.
The annual gathering of Apple’s developers took place earlier this week in San Francisco, and top Apple execs Tim Cook, Phil Schiller and Craig Federighi took center stage to reveal what new products and features users can expect to see from Apple in the near future.
Before we get into the specific announcements from the Worldwide Developers Conference (WWDC), let’s talk numbers and take a look at what Apple has been up to as well as their growth as a company:
9 million registered Apple developers (47 percent increase from 2013)
800 million iOS-powered devices sold to date
80 million Macs have been installed to date
130 million new customers in the past year
1.2 million apps currently available in the App store
75 billion apps downloaded to date
12% growth in the Mac market share (whereas PC has declined)
According to Forrester Research, it is “inevitable that enterprise IT in 2020 will be a hybrid mix of on- and off-premises services. While [a firm’s] particular mix of actual cloud services will vary, it’s unlikely that any enterprise IT shop will still be primarily focused on configuring server, storage, and network devices as a core competency. The shift to business technology and IT-as-a-service is well underway, so you can either ignore it, try to contain it, or embrace it.”
So when it the right time for a hedge fund to make the cloud move?
For newly emerging investment firms, the choice to adopt a cloud-based architecture is an easy one. Few firms have a business model where an on-premise solution makes strategic or economic sense -- but what about established firms that have been in business for several years and have invested millions of dollars in technology? When is the right time to make a move?
Opportunities and timing will vary, but generally speaking, the following three scenarios represent ideal inflection points for moving to the cloud:
Office Relocations: This is an ideal time to switch to the cloud. Many hedge funds are understandably reluctant to take on the expense of moving a massive, expensive, and often outdated infrastructure to a new location – particularly if the company expects to phase out certain portions or components in the following 24-36 months. In such cases, migrating to the cloud before relocating an office can be a smart move.
New Applications: Larger investment firms with larger application sets often find that a transitional strategy is best. Abrupt migrations to the cloud can be disruptive. In those instances, investment firms often find that new applications can start in the cloud – no subsequent migration needed. And those deployments are faster. While few IT portfolios will see 100 percent turnover in the short term, this strategy can simplify any migration of on-premise applications to the cloud by minimizing the work required when the company finally makes its move.
Earlier this week, we hosted a webinar on the topic of application hosting in the cloud and featured our newest partner, Black Mountain Systems. Our speakers looked at the benefits firms can realize from hosting their hedge fund applications in the cloud as well as the future of cloud adoption. Let’s take a closer look at what was covered. If you’d like to watch the full event replay, click here.
Here at Eze Castle Integration, we see the adoption of cloud computing continuing to grow in a significant way, particularly among new startup firms. Realizing the operational and financial benefits of a cloud infrastructure, nearly 95 percent of new startup funds are opting to utilize the cloud. Existing firms are also shifting in this direction (though at a much slower pace), and we’re seeing on-premise infrastructure deployments starting to decline.
Effectively managing liquidity and reporting within investment portfolios has been a struggle for fund of funds, institutional investors, pensions and endowments. No manager wants to in a position where their investor liquidity does not match portfolio liquidity but at the same time firms are trying to offer investors more frequent liquidity options as a competitive edge. In some case, investors are even asking for no liquidity limits.
To adapt to the changing liquidity risk landscape, firms are selecting portfolio management systems from companies like Ledgex Systems. Recently, Ledgex released the next generation of its portfolio management platform that delivers new liquidity management and manager research modules. These new tools give firms real-time visibility into their existing and proposed portfolio liquidity options while providing the research and analytics that support the manager selection process.
The Ledgex Liquidity module provides an advanced liquidity modeling utility and reporting engine, which can generate all available options for accessing assets given certain conditions by processing each tranche and their respective trade characteristics with a manager’s liquidity terms. Ledgex can model 90% of the manager liquidity terms used in the industry.
It’s true, the Canadian smartphone maker BlackBerry is preparing to launch a new firmware upgrade to its BB10 OS smartphone, including the Q5, Q10, Z10 and Z30 phones, that will allow Android apps to become available to its users via the BlackBerry World portal.
There is no question the BlackBerry handsets have been struggling because of a significant “app gap.” Consumers have come to expect unimaginable numbers of apps at their fingertips, which can easily be found on iOS and Android.
In the past, BlackBerry only accepted apps created using their own proprietary format. The 10.2.1 upgrade to its BlackBerry operating system will support Android apps.
I know, I know, we say it every year. But can you believe another year has come to an end? Even more amazing? We’ve now been bringing you fresh content on Hedge IT for nearly four years – including close to 400 articles! As we look ahead to 2014, we want to extend a huge THANK YOU to our loyal Hedge IT readers and hope you’ll stick around to see what we have up our sleeves in the New Year. Here’s a hint: it may even include a fresh new look...
With that said, as we do every year, let’s take a look back at some of our most popular Hedge IT articles from 2013. Here are some of your favorites (and ours, too).
Back in September, we revealed the results of our 2013 Survey: Examining Cloud Usage within the Investment Management Industry. In conjunction with IDG Research, we surveyed more than 100 financial services firms and found that nearly all of them (87%) are using the cloud in some way. Other key findings included the dominance of the private cloud (74%) and the growing belief that the private cloud is just as secure as an on-premise infrastructure. Read the complete survey report here.
Categorized under: Trends We're Seeing Business Continuity Planning Cloud Computing Disaster Recovery Hedge Fund Operations Hedge Fund Regulation Infrastructure Launching A Hedge Fund Outsourcing Security Software
The results from our Global Hedge Fund Technology and Operations Benchmark Study are in and here is a snapshot of the 2013 findings. You can find the complete report here. We surveyed 538 buy-side firms across the United States, UK and Asia in order to discover their front, middle, and back office technology and application preferences.
All survey respondents fell into the following categories within the financial industry: hedge fund (60%), asset/investment manager (13%), private equity firm (8%), fund of hedge fund (5%), non-financial firm (5%), advisory firm (1%), broker dealer (1%), venture capital firm (1%), quant fund (1%), or ‘other’ (3%).
The firms resided in three different asset classes: 30 percent reported their AUM as $100 million and under; 32 percent fell between $101 and $500 million; and 38 percent reported over $500 million in assets under management.
In regards to investment strategy, long/short equity continues to dominate as the most favorable with 45 percent of respondents reporting this to be their primary investment strategy. Other preferred strategies include fixed income (8%), credit (7%), global macro (6%), emerging markets (6%), distressed debt (5%), and event driven (4%). The top prime brokers employed by firms in 2013 are Goldman Sachs, Morgan Stanley, Credit Suisse, JP Morgan and UBS (same as last year).
Now let's look at front, middle and back office applications most commonly used at hedge funds.
They say a picture is worth a thousand words so here is an infographic of our 2013 Global Hedge Fund Technology Benchmark Study that explores the most common front, middle and back office applications and technology used at today's hedge funds.