A new white paper by New York-based Liquid Holdings Group Inc addresses the very real issue of credibility that hedge fund managers face in today’s crowded market.
Entitled Driving Hedge Fund Growth & Institutional Credibility: An Introduction to the 5 Ss of SaaS, the white paper details five key elements of a vertical SaaS solution managers should be mindful of when trying to build institutional credibility, both with service providers and investors.
Today’s environment is unforgiving for those managers who fail to demonstrate an ability to foster closer collaboration with institutional investors. Managers need a level of sophistication in their infrastructure that can respond to, and collaborate with counterparties and investors seamlessly.
Having the right technology in place – specifically through using the right Software as a Service (SaaS) model – can go a long way to providing managers with the flexibility needed to harvest alpha in disparate markets. Moreover, having the right operating system in place offers the opportunity to engage more meaningfully with investors. This builds trust and can lead to stickier assets; crucial for new managers who are vying for investors in a post-Dodd Frank world.
The first of the 5 S’s that Liquid Holdings refers to is Speed. This implies not only that a fund has real-time reporting and risk management tools in place but also that investor demands can be quickly actioned, or indeed short-term market dislocations can be capitalized on. As Liquid Holdings writes: “In order to keep and increase allocations from entities like pensions and endowments, funds must demonstrate that they can actively mitigate or take advantage of volatility through operational switches at the right moment.”
As more software solutions move into the cloud, managers need to be aware that not all cloud technologies are created equal. Speed in operational terms is akin to a highly tuned engine where all eight cylinders are firing. From front to back, a hedge fund needs to function such that the whole trade lifecycle from order and execution through to risk management, compliance and reporting is conducted with the greatest efficiency. Multi-tenant cloud architecture can achieve this where single tenant architecture cannot.
The technology choices that managers make have the potential to forge collaborative – and thus institutional – relationships on both sides of the fence; with counterparties and investors alike.
To find out more about the 5 S’s of the SaaS model – of which Speed is but the first – click here to read the white paper in full
