January 9, 2021 | Best Practices
Launch a Fund Nimble Enough to Go Anywhere
Funds win when they can seize opportunity—whether by investing in new markets and asset classes or raising new money from investors.
Choosing software today that grows with and adapts to your emerging fund can save you major headaches and dollars down the road.
It may be hard to imagine now—with everything buttoned up, from your strategy to your startup capital—but launching with the right platform is the most crucial early decision you will make.
Fast forward several years from now: You’ll want to be nimble and competitive so you’re not wasting time and energy renegotiating and swapping out vendors every few years.
Look for Software That’s Scalable and Flexible
A cloud-based solution can provide a platform for portfolio management, accounting, analytics, and trading capabilities across asset classes and geographies, enabling fund managers to invest opportunistically in emerging opportunities as they arise.
You never know when you may need additional capacity, but you also don’t want to pay for more infrastructure until you need it. A multi-tenant cloud-based platform can grow as your fund grows, ramping up during boom periods and scaling back when times get tough. With single tenant cloud architecture you are locked into capacity—whether you need it or not; single-tenant offerings provide flexibility for the unknown.
In 2020, for instance, many fund managers were looking for ways to participate in the red-hot performance of cryptocurrencies, as crypto-focused funds gained 166% for the year. But, how many actually had the infrastructure to invest in Bitcoin and other digital currencies built right into their systems? Or how long would it take to integrate third-party platforms into their existing systems?
Funds thrive when they are technologically equipped to enter new markets and asset classes and when they can scale their infrastructure up and down seamlessly.
Get The Data to Support Your Decisions
Investing across asset classes requires integrated and continually updated data, often gathered from multiple sources and nearly always full of noise and duplication.
In our survey, nearly two-thirds of hedge fund managers (64%) cited integrating data from multiple internal and external sources as their number one data-related challenge. And more than half (57%) of the fund managers we contacted in 2020 planned to increase their spending on unifying data from multiple sources—in fact this was the top spending priority last year.
Translating raw data into insight requires computer power.
With the right systems, you can generate better, richer, unified data that leads to faster and more informed investment decisions, as well as more powerful insights that shape a manager’s roadmap and future.
The right software can allow fund managers to build one golden dataset that is updated in real-time and readily accessible to the whole team. It connects investment and operational decision-making through one continuously updated enterprise-wide view.
A cloud-based solution brings all parts of your organization the same, high-quality data, so that portfolio management, trade execution, risk management, and general ledger decisions all reflect the best available information all the time.
Embrace the Cloud and Improve Business Results
According to a 2014 Greenwich Associates report, it was estimated that hedge funds could reduce the portfolio analysis-related portion of computing costs by 50% by switching to an enterprise cloud offering. Today, five years later, hedge fund managers are proving that estimate right, extracting greater cost-efficiency, data security, and more effective staff deployment by moving to the cloud.
In a recent survey, we asked hedge fund managers how moving to the cloud has affected their businesses—and 100% of them reported that it allows them to do more with less, and to do it faster. One European hedge fund manager’s head of IT infrastructure noted that migrating to the cloud allowed for live, continuous data reconciliations rather than running them over nights and weekends.
Other fund managers cited enhanced data security as a key benefit of migrating to the cloud. About three-quarters (72%) of fully cloud-based fund managers said they felt their data was safe in the cloud, while half (50%) of partly cloud-based fund managers saw an improvement. The difference was especially noticeable to smaller fund managers, who simply couldn’t duplicate the specialized cybersecurity services that a dedicated technology provider could offer.
Many fund managers hesitate to migrate to the cloud because they think they’ll need to dedicate more staff to managing the IT function, but in reality, moving the cloud can free up staff to build the business. In fact, nearly all (96%) of hedge fund managers we surveyed kept their headcount steady after moving to the cloud, while just 4% added staff. However, while the number of employees stayed constant (or slightly higher), their jobs often changed. A significant number of fund managers reassigned staff away from rote and repetitive tasks to more valuable ones, such as managing client and vendor relationships and helping with the firm’s internal digitalization and development efforts.
In short, cloud-based infrastructure is designed to grow with you, adding new processing power and capabilities as you attract new investors. It can improve the quality of your data, too, and create a roadmap for integrating new data sources.
Choosing to build your fund using native cloud-based technology can give your organization a significant competitive advantage.
All From One Cloud Partner
Enfusion’s fund technology is flexible, cloud-based, and capable of handling multiple asset classes. It’s built to evolve alongside your fund strategy, maximizing your fund’s chance for success.
How do we do it?
Hedge fund managers recognize the power of our three-pronged approach. In fact, Enfusion had one of the highest profile fund launches in history. Here’s why:
- Software. Portfolio management, trade execution, risk management, and general ledger are all integrated into a single cloud-based system. Integration aligns investment and operational decision-making, so that every team member can leverage the same insight in real-time, across the entire portfolio.
- Services. Our Managed Services offering allows you to focus on what you do best: front office revenue generation. We’ll keep your middle and back office lean and informed. Our highly skilled expert team enables investment firms to scale quickly, unlock resources, and gain valuable data insight.
- Analytics. Our Visual Analytics offering interprets data to keep you current on patterns, problems, and performance. By storing, mining, and analyzing data across the entire investment lifecycle, we give you the interactive, visual analysis to untangle issues and quickly get insights to move your business forward. You’ll be freed up to ask deeper questions and deliver more meaningful answers from your investment portfolio.
Don’t waste time and money on software with limited capabilities when you can have a native, cloud-based software that grows with you. With competing managers dealing with their 2000s-era heavy infrastructure, working with a sleek, nimble cloud-based platform gives you a significant advantage.
Maximize your competitive advantage and get the nimble software you need with Enfusion.
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