Fri, 16/11/2007 - 05:59
The launch by Advent Software of version 7.0 of its Geneva investment management, reporting and accounting platform is set to increase the application's attractiveness to hedge fund managers, who are already the fastest-growing user category, according to Chris Cattermole, sales manager for Geneva in Europe, the Middle East and Africa.
Far from being a minor update, he says, the new version of Geneva represents a significant stride forward in terms of usability and the integration of third-party applications, but most important is an expansion of its area of functionality to encompass portfolio management as well as accounting.
In the past, says Paul Watthey, Advent's marketing director for the EMEA region, Geneva has been perceived by hedge fund managers to be a complex and costly fund accounting solution that was hard to implement and was really designed for big players. 'That's not the case at all, particularly now,' he says. 'Today it has a much broader appeal to hedge funds of any size.'
Watthey expresses the hope that this understanding will get through to the market, but there is evidence that it is already doing so. Historically Geneva has dominated the hedge fund services market, being used by eight of the top 10 fund administrators and eight of the top 10 global prime brokers, but today, he says, 'around 70 per cent of Geneva clients are hedge fund managers. In total Geneva has more than 130 clients, spanning hedge funds, asset managers, prime brokers and fund administrators.'
The ability to enter complex instruments into the system with significantly greater ease is of vital importance to a market in which OTC derivatives have become much more important over the past few years. 'The biggest change is to the interaction that the hedge fund will have with the application,' Cattermole says. 'Instead of having to scroll through multiple menus and bring up multiple screens, fund managers, traders and operations staff have access to consolidated, easy to use and intuitive data entry screens.
'The key things that our clients are very interested in is our ability to handle complex instruments, such as swaps, in a fairly intuitive manner. In the past it could take anything between five and 15 minutes to enter all the details of a swap, depending on what application was running. Geneva's new front end makes the data entry a lot faster.'
The greater sophistication of instruments and strategies used by hedge funds is placing new demands on the software applications they use, Cattermole says. 'Hedge funds are trading increasingly sophisticated instruments and are having to track complex cash flows. Traditionally they would have managed this on a portfolio management system, but the functionality required to deal with the instruments they trade nowadays is more inherent in an accounting system than a portfolio management system per se, so we've expanded the Geneva footprint into a combined portfolio management and accounting system.
'The reporting is a lot more user-friendly, and users can get timely access to in-depth data associated with the instruments that the hedge funds are trading. What that means for a hedge fund is that rather than having to wait long periods of time for the operations staff to deliver reports- perhaps as long as 30 minutes for an accurate valuation - fund managers or traders can either trigger it themselves from their desktop. It makes the decision timeframes on investments much smaller, and gives the fund a faster reaction speed.'
In addition, Cattermole says, the new version of Geneva greatly simplifies integration of third-party applications through Microsoft technology and allows users, including institutional asset managers and traditional and 130/30 fund managers, to adopt a best of breed approach.
'Many large managers have their own in-house systems that they've built or purchased and adapted for functions such as risk management, attribution and in-house valuation of complex securities,' he says. 'We can now really easily integrate these applications. The data no longer has to be passed through into these external applications but can be read directly from Geneva.'
Microsoft technology also facilitates greater flexibility in reporting, also an important consideration given the greater focus on transparency among the institutional investors that are coming to dominate hedge fund capital inflows. 'In the past reports tended to be fairly static, but now clients are demanding more options in terms of the configuration of their reports,' Cattermole says. 'This kind of customisation can now be delivered by Geneva rather than requiring work from support staff. Ultimately it makes the fund manager's and the operations staff's jobs a lot easier.'
One change of greater important to IT managers is that Geneva is much more scalable because firms with high levels of trading activity can now spread large transaction volumes over multiple servers. 'Rather than having one server dealing with hundreds of thousands of trades a day, you can spread that automatically across multiple servers,' Cattermole says. 'Previously the manager would have had to run that on one single very large server.'
Clients have responded enthusiastically to the changes since the new version of Geneva appeared last month - as they should, since much of the development work has been inspired directly by their feedback. 'This is really broadening our abilities in the marketplace,' Watthey says. 'We feel the hedge fund market is not always being served well by some of our competitors. Most of the upgrades we are bringing to the market are derived from client feedback. Clients are telling us what they want from the product to help them run their business better.'
Cattermole adds: 'It is particularly big step for us in Europe because in the past hedge funds wanted the portfolio management systems but weren't terribly interested in the in-depth accounting elements - they just wanted to see current valuations. Now we're killing two birds with one stone with an accounting and portfolio management system all in one. Anyone wanting up to date information on prices, P&L or valuations can take it straight out of Geneva.'
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