January 13, 2021 | Best Practices
When it Comes to Operations, We’re Your Backbone
A growing number of forward-looking managers are finding that, when managed properly, operations are not just a cost center but a source of alpha.
Funds with sound, technology-enabled operational platforms can deploy resources more effectively, extract better insights from data, empower investment teams to seize opportunities, and protect their organizations, funds and investors from uncompensated risk.
Sound operations have long been a top concern for hedge funds. In fact, fund managers have consistently pointed to operational failures as some of their greatest risk factors over the last two decades.
A landmark study from CapCo from the early 2000s highlighted the importance of sound operations, noting that operational risks accounted for half of all hedge fund failures. In fact, problems in nuts and bolts back-office areas, like trade processing, accounting, administration, valuation and reporting, were far more likely to drive funds out of business than bad investment decisions.
Since that study was issued, the complexity and critical nature of operational excellence have only intensified.
Fund managers need technological platforms capable of integrating data from multiple sources, providing real-time insights across geographic markets, asset classes, and public and private markets. Increased calls for transparency from investors mean clear documentation of processes, holdings, reporting and compliance issues are more important than ever—and must be accomplished while being cost-effective to meet demands for lower fees.
Organizations still managing operations via spreadsheets and manual processes are ceding a competitive edge. Outdated systems can cost funds millions in efficiency, risk control, diligence oversight, and overall competitiveness.
Most traditional investment management platforms were designed in the 1990s and can struggle to keep up with today’s investment strategies and multi-asset class approaches. In other words, what was innovative then isn’t effective today.
But better solutions are emerging all the time, in most cases through the cloud.
Because these platforms are continually updated and refined, they keep organizations on the cutting edge of operational efficiency without requiring constant upgrades and investments in new technology.
Turn to the Cloud for Greater Efficiency
The quest for operational efficiency—doing more with less and doing it faster—has led many hedge fund managers to explore cloud-based solutions.
The good news is that the cloud has delivered on this front.
In a recent survey of 56 hedge fund managers and executives, we found that every participant (100%) reported improvements in operational efficiency as a result of their migration.
Not only that, but about three-quarters of fully cloud-based funds and half of partially cloud-based managers in our survey reported improved data security. Two-thirds of fully cloud-based firms experienced an increase in cybersecurity, as well.
Other fund managers mentioned data management as a key benefit because cloud-based platforms can also integrate multiple data streams into one golden dataset. More than a third of fully and partially cloud-based firms (39%) reported that real-time data access was a notable benefit of cloud migration.
For all these reasons, full or partial cloud hosting has become a default for many forward-looking hedge fund managers.
“Cloud is so normal now that we don’t even talk about it much when meeting our service providers. We use what our service provider gives us and expect it to work,” says the COO of an APAC equity hedge fund.
Strong Partners, Strong Partnerships
Even if you’re ready to build your fund on cloud-based technology, it’s time to consider working with the right provider. Relying on external partners who bring both robust resources and industry expertise will empower managers like you with speed to market.
Look for a provider that listens to client input, incorporating hedge fund managers’ first-hand insights and feedback into product updates. A client-first approach ensures a smooth and speedy implementation. Also, make sure you choose a partner that will grow and evolve with you.
Ask about how the platform can:
- Deliver innovation. Learn if there are continual updates to ensure that your fund keeps pace with the times.
- Get you up and running. How many implementations have they done? How long does it take? How disruptive is the process while it’s going on? Find a provider whose onboarding process delivers a world-class experience in getting new clients live quickly.
- Support you and your fund as it grows. Find out who will be your point of contact to respond to and resolve issues in a timely fashion, with a clear escalation path. Also ask about how post-implementation support is handled and what additional resources are offered in areas like OEMS, accounting, reconciliation, portfolio operations, valuation, reporting, and application support. The platform should also be able to support your growth as you expand into new asset types, markets and geographies.
- Help you scale. A good provider can grow with you, delivering scalable middle and back office functions, including account set up, data migration, reconciliation, fund accounting and monthly close.
Increased operational complexity due to new markets, assets classes, managed accounts and/or trading strategies doesn’t have to be a burden.
Enfusion’s managed services take the pressure off while adding value to your operations. A GL core ensures one golden dataset across your entire operation and with every interface to the street.
Our award-winning software, visual analytics, and middle and back office managed services work together to deliver the best cloud-based technology experience in the world.
First, our software keeps investment and operational decision-makers connected and in sync with one another. Then, our visual analytics mines this data, delivering laser-sharp forecasting and crystal-clear business drivers. Finally, our managed services leverage these drivers by redirecting resources for maximum efficiency, unmatched business insights and optimum results. That’s our proven recipe for success.
Investing in Our Growth Means Investing in Your Growth
Since 2017, we’ve increased our technology and developer headcount by 420%. Our customer support staff has increased 273% in that same time period. Our investment in research and development has increased by 325%.
Find out more about our product support team, our help center, and our promise.
See Why Emerging Managers Choose Enfusion
Our client support and innovation agility will bolster you from your fund launch through expansion. Enfusion’s all-in-one, cloud-based platform has been behind some of the largest, highest-profile launches in history.
Imagine what we can do for you.
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