• Home
  • About Us
  • Contact
  • Your Account
  • Subscribe
No Result
View All Result
Wednesday, February 1, 2023
Alternatives Watch
  • Hedge Funds
    • Manager News
    • Mandates
    • Service Provider News
    • CTAs/Managed Futures
  • Private Equity
    • Manager News
    • Mandates
    • Service Provider News
  • Private Credit
    • Manager News
    • Mandates
    • Service Provider News
  • RE/Infrastructure
    • Manager News
    • Mandates
    • Service Provider News
  • Investor News
    • Endowments and Foundations
    • ESG
    • Pensions
    • Platforms
    • Consultants
  • Research
    • Investor Scorecard
    • Manager Scorecard
  • Subscribe
  • Log In
  • Hedge Funds
    • Manager News
    • Mandates
    • Service Provider News
    • CTAs/Managed Futures
  • Private Equity
    • Manager News
    • Mandates
    • Service Provider News
  • Private Credit
    • Manager News
    • Mandates
    • Service Provider News
  • RE/Infrastructure
    • Manager News
    • Mandates
    • Service Provider News
  • Investor News
    • Endowments and Foundations
    • ESG
    • Pensions
    • Platforms
    • Consultants
  • Research
    • Investor Scorecard
    • Manager Scorecard
  • Subscribe
  • Log In
No Result
View All Result
Alternatives Watch
No Result
View All Result

Post-COVID automation is the key to differentiation for hedge funds

Christopher BloechlebyChristopher Bloechle
July 20, 2020
in Hedge Funds, Service Provider News
Post-COVID automation is the key to differentiation for hedge funds

Soumil Kumar/Pexels

ShareTweetShareSendSend

Globally, economies are cautiously reopening. Businesses are keeping one eye firmly on the present but also cautiously looking ahead to what’s shaping up as a great reset.

In the alternative asset management industry, we are poised to undergo several changes over the coming months and years, some of which will be truly transformational. If hedge funds are to navigate this uncertain period, they will need to embrace automation. Even though a few investment firms have implemented positive structural and operational reforms to their front, middle and back offices, a large proportion of the industry still relies on legacy technology and manual processing. This ongoing dependency on antiquated systems exposes fund managers to potential risks and creates added costs.

Constrained by legacy

In many instances, fund managers continue to perform operational activities — such as investor reporting, risk management and compliance — using Excel spreadsheets, often stored in an unstructured format across multiple workstreams. Not only does this increase operational risk and duplication, as the likelihood of making a mistake or miscalculation is high, but it eats into margins because the costs of running legacy technology can be quite sizeable, owing to the increased reliance on human intermediation in the workflow process.

Aside from being incredibly inefficient, institutional investors have made it clear that they expect their fund managers to have a robust digital strategy and automated operational processes in place. This is because clients are fully aware of the risks and pitfalls of running ageing technology systems. A failure to automate could therefore be the difference between losing and winning a mandate. With competition for investor capital likely to accelerate, fund managers need to demonstrate that they have best in class technology.

Expect scrutiny from investors and regulators

COVID-19 has also demonstrated how integral automation is, especially following the transition into lockdown working conditions. It was largely the fund managers who failed to invest in their core technology infrastructure and automated processes who have struggled the most operationally during COVID-19. That the initial implementation of some business continuity plans (BCPs) was so haphazard at certain funds it is likely to result in these firms fielding tough questions from investors. As a result, automation and operational resiliency will become primary areas of focus in investor due diligences moving forward.

It is not solely clients who will be reviewing the veracity of the alternative asset management industry’s operational processes. Regulators — including the US Securities and Exchange Commission (SEC) and UK Financial Conduct Authority (FCA) — issued strongly worded statements at the beginning of the year telling investment firms to focus on their operational resiliency. The FCA said operational resiliency, namely the ability to adequately manage technology and cyber-risk, was one of its main priorities alongside liquidity risk; governance; and LIBOR reform. Consequentially, regulators will almost certainly examine how the technology and operational processes at asset managers performed during the peak of the COVID-19 crisis.

Why automation matters

Automation can net managers many operational benefits. It can facilitate enhanced STP (straight through processing) and reduced manual intervention, thereby allowing for cost synergies to be realized. At a time when margins and revenues are under enormous pressure, these operational savings will be crucial. New data from Credit Suisse found that hedge funds have emerged as the top pick among asset allocators heading into the second half of 2020, outflanking other products such as private equity and real estate as investors’ asset-class-of-choice. If managers want to be on the winning end of this opportunity they will need to do all they can.

ShareTweetShareSendSend
Previous Post

ESG, diverse manager selection evolves to meet historic institutional investor interest

Next Post

China promotes central bank digital currency

Christopher Bloechle

Christopher Bloechle

Christopher Bloechle is chief technology officer at Portfolio BI and oversees the building and deploying of the solutions of the company’s flagship product PBI EDM, a SaaS-based front-to-back office automation technology platform. Prior to joining Portfolio BI in early 2018, he spent 16 years with Point 72 Asset Management/SAC Capital Advisors successfully fulfilling IT roles with responsibility for software products and solutions utilized in every facet of the fund.

Related Posts

MFA welcomes UK regulator's recognition of short selling in ESG
ESG

MFA welcomes UK regulator’s recognition of short selling in ESG

Titan’s Morgan reveals how she is keeping up with crypto
CTAs/Managed Futures

Titan’s Morgan reveals how she is keeping up with crypto

NY pension adds $1.2bn across PE, credit, HF and real estate programs
Pensions

NY pension adds $1.2bn across PE, credit, HF and real estate programs

AI hedge fund Castle Ridge builds success with multi-model system
Hedge Funds

AI hedge fund Castle Ridge builds success with multi-model system

Long/short hedge funds struggle as redemptions surge
Hedge Funds

Long/short hedge funds struggle as redemptions surge

Next Post
China promotes central bank digital currency

China promotes central bank digital currency

Log In/Out

Lost your password?

Search the AW Archives

No Result
View All Result

Recent News

AW Top 10 reads for January

AW Top 10 reads for January

Patient Square closes inaugural fund at $3.9bn

Patient Square closes inaugural fund at $3.9bn

MFA welcomes UK regulator's recognition of short selling in ESG

MFA welcomes UK regulator’s recognition of short selling in ESG

Titan’s Morgan reveals how she is keeping up with crypto

Titan’s Morgan reveals how she is keeping up with crypto

Be an Alts Insider

Sign up for your FREE daily alts news briefing

Subscribe

Subscribe to AW
Alternatives Watch

© 2019-2022, All Rights Reserved  |  BMV Digital

Navigate Site

  • Hedge Funds
  • Private Equity
  • Private Credit
  • RE/Infrastructure
  • Investor News
  • Research
  • Subscribe
  • Log In

Follow Us

No Result
View All Result
  • Hedge Funds
    • Manager News
    • Mandates
    • Service Provider News
    • CTAs/Managed Futures
  • Private Equity
    • Manager News
    • Mandates
    • Service Provider News
  • Private Credit
    • Manager News
    • Mandates
    • Service Provider News
  • RE/Infrastructure
    • Manager News
    • Mandates
    • Service Provider News
  • Investor News
    • Endowments and Foundations
    • ESG
    • Pensions
    • Platforms
    • Consultants
  • Research
    • Investor Scorecard
    • Manager Scorecard
  • Subscribe
  • Log In

© 2019-2022, All Rights Reserved  |  BMV Digital

Be an alts insider

Start your days in the know with our free newsletter

No, I don't want to be an alts insider

Thank

You!

Follow us
on LinkedIn

Lost your password?

Cookie Consent
We do not use cookies on our website other than those that are strictly necessary for the website to function. By clicking “Accept”, you consent to the use of all six strictly necessary cookies.
Do not sell my personal information.
Cookie Settings Accept
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Save & Accept
Powered by CookieYes Logo