Operational risk, it could be argued, is equally as important to today’s hedge fund manager as market risk.
To help support its global client-base of approximately 750 funds, Apex Fund Services established Apex Technologies last year. Headed up by managing director Paul Spendiff (pictured), the firm works with a variety of partners. One of these key partnerships is with Linedata. This has resulted in Apex Vision, a portfolio management solution that sits on the Linedata Beauchamp platform.
Other partners include StatPro, offering portfolio analysis, risk and asset valuation support, and Eze Castle Integration, which has given rise to the Apex Cloud. A range of other solutions can plug into Apex Vision such as Apex 247, a web hosted manager and investor reporting tool, which uses the PMS to create a real-time reporting feed.
At the front end clients have the option of using their own systems, Apex Vector, the integrated FIX connected front-office trade order management solution with pre-trade compliance or Apex Trade Manager, based on Linedata’s heavy duty OMS, Longview.
The result is a fully flexible, multi-asset front to back portfolio management solution, and as Spendiff explains:
“As you place orders in the OMS, within 15 minutes that trade is coming in to our fund accounting system at the back end. You can see that as the manager, and, if you want, extend that to your investors. They could basically watch you trade, with say a 20-minute delay. That’s quite a potent offering for managers who are looking to differentiate themselves from the crowd.”
From an operational risk perspective, Apex Technologies works with Apex’s clients to develop suitable processes for overcoming operational stress, from execution processes through to reporting processes.
“Obviously, the PMS is integral to this. Managers need to have the ability, in real time, to look at counterparty risk, trade risk (any trade breaks occurring?), to see if there’s too much concentration risk in the portfolio, liquidity risk etc. It’s about providing operational oversight. With Apex Vision we give managers the tools to dig down and interrogate their portfolios,” says Spendiff.
To cope with investment risk, rather than trying to be all things to all men Apex Technologies has created an open architecture that Spendiff refers to as “risk tool agnostic”; hence the multiple risk tool partnerships. What this allows is for managers of all shapes and sizes to find a solution that best fits their needs.
A small manager might only require a cost-effective risk tool like StatPro to run analysis on a plain vanilla equities book. “Alternatively, a larger manager might require a more complete solution for UCITS reporting where the data needs to be more deeply interrogated, or a powerful risk engine where they can run multiple “What if…” scenarios across multiple markets.”
“We are able to support any type of scenario, depending on the client’s risk management needs, to give them the analysis they want. It’s about providing them with the data that we have in a format they can use. We would rather work with a range of risk partners – from Riskdata to StatPro – because it means we’re not trying to second guess what our clients want.
“We could build the world’s biggest risk engine but 95 per cent of clients wouldn’t need it; it would be analogous to using a sledgehammer to crack a nut.”