Top 5 Hedge Fund Technology Challenges All Blown Away by the Cloud
Author: Peter Curley of Xignite
The year 2011 proved to be yet another lackluster year for the hedge fund industry. There are any number of possible explanations for why the average hedge fund lost 4.8 per cent including increased volatility, lack of focus, crowded strategies, and regulation. Whatever the precise reason for this continued poor performance, it is likely that the hedge fund industry has only a limited amount of time to get back to the glory years of consistently providing absolute returns, before it risks a significant outflow of assets under management.
The adoption of an on-demand market data cloud instantly benefits the hedge fund industry because it allows firms to address the top 5 hedge fund technology challenges.
This post is the first in a multi-part series that describes the top 5 hedge fund technology challenges all blown away by the market data cloud. In subsequent posts we will examine each of the five hedge fund technology challenges in greater detail.
Hedge Fund Technology Challenge #1
Focusing on alpha generation, not market data management
Now more than ever hedge fund managers need to be laser-focused on their core responsibility of alpha generation. Distractions such as reporting, IT management, and just the general business of running a hedge fund all play a role in reducing the hedge fund industry’s focus on the investment management process. With an on-demand market data cloud all the headaches involved with building and maintaining a market data infrastructure are removed.
Hedge Fund Technology Challenge #2
Expanding the universe of alpha generation possibilities
Hedge funds compete in a world where alpha generation opportunities have become more fleeting and dispersed than ever before. In this new world firms require a market data solution that allows them to quickly analyze a broad set of opportunities wherever they may be. The market data cloud model expands the universe of alpha generation possibilities by putting vast arrays of global and multi-asset class market data right at the fingertips of hedge fund managers.
Hedge Fund Technology Challenge #3
Bringing instant transparency to regulatory and investor reporting
The job of a hedge fund manager has become infinitely more complex with demands for improved transparency coming from seemingly every direction. For many firms this has meant onerous reporting requirements, made even more difficult by inflexible systems, and an inability to quickly access accurate market data. An on-demand market data solution, that offers comprehensive coverage of real-time, historical, and reference data, allows firms to instantly enrich their regulatory and investor reporting.
Hedge Fund Technology Challenge #4
Getting new funds up and running in record time
The health of the industry depends on relatively low barriers to entry for new hedge fund entrants, because as we know, size kills alpha. A major barrier for new funds is the sourcing of baseline market data, and the requirement to build out a market data infrastructure. Adoption of the market data cloud allows new startup hedge funds to focus on other more important tasks so that they can launch sooner, and begin to establish their track records.
Hedge Fund Technology Challenge #5
Add market data quickly to Excel modeling and reporting
Let’s face it most of the hedge fund industry’s important activities such as modeling and reporting are still done in Microsoft Excel. An on-demand solution means no more time wasted wrestling with market data feeds or files. The market data cloud allows firms to quickly add the market data they need, in the format of their choice, for all their Excel modeling and reporting.
The next blog in this series will be “Hedge Fund Technology Challenge #1 – Focusing on alpha generation, not market data management”.
To learn more about the Xignite Market Data Cloud for Hedge Funds email us at firstname.lastname@example.org or call 1.866.XML.SOAP.