PARTNER CONTENT
Digital assets and Al are transforming finance, providing greater transparency and efficiency, but also challenging asset managers too, with potential data overload, and more complex workflows. Federico Mele, Co-Founder & CEO of GenieAI, provider of an Al-powered portfolio and risk management system (PMS/RMS) for digital assets funds, and the winner of the Risk Management Software of the Year award at the Hedgeweek US Awards 2024, outlines how the firm is helping clients meet those challenges…
What is GenieAI’s service offering and what makes it special?
GenieAI is an industry-leading AI-powered Portfolio and Risk Management System (PMS/RMS) for digital asset funds. Through advanced AI, our platform helps asset managers generate more alpha and mitigate risks by optimizing allocations and enhancing and automating analytical, research, and operational workflows.
What are the three selling points of your business and service range?
First, thanks to our best-in-class AI stack, our GenieAI platform provides fund managers with insights that have practical and quantifiable impact on their alpha research and risk management. For example, portfolio managers can optimize asset or strategy allocations to achieve their desired risk-return objectives, or effortlessly surface hidden risks and quickly react to make decisions that directly affect their performance. Achieving these insights would just be too complex without the cutting-edge technologies we’ve built from the ground up.
Second, our platform is the most feature-rich, all-in-one risk and performance management platform in the digital assets space. Our PMS/RMS automates countless workflows for investment, operations, and research teams, ensuring teams move faster, do higher-quality work, and are in sync with one another. From smart portfolio construction that enhances a portfolio manager’s discretionary views to detailed breakdowns of P&L drivers across complex derivative or DeFi strategies, or detailed reconciliation reports, our platform saves countless hours from painful tasks for front-, middle-, and back-office teams.
Finally, our AI Lab empowers asset managers to efficiently build in-house IP and advance their R&D, enabling fund managers to take their investment theses, data, and views of the market, and use our state-of-the-art AI and machine learning stack to create highly customized engines that function as an extension of the portfolio manager’s brain. These engines have various applications from asset or strategy allocation to risk management. With AI Lab, we’ve created a better way to help funds scale their internal IP without the need to hire hard-to-find and expensive specialized talent.
How have your services helped hedge fund clients navigate the economic landscape of the past 12 months?
Over the past 12 months, the introduction of spot BTC and ETH ETFs has significantly increased institutional interest in digital assets, driving allocators to closely scrutinize specialized crypto funds, and pressuring funds to meet the rising expectations of allocators, demanding institutional-grade technology to boost performance, manage risk, and operate efficiently across front, middle, and back-office functions.
In this environment, where time-to-market is critical, many funds face the challenge of operating with lean teams that must handle alpha research, portfolio construction, and both pre- and post-trade operations and analytics. They often lack the resources or in-house expertise to build and maintain the necessary infrastructure themselves, and piecing together multiple vendor solutions or reports from various trading platforms frequently results in inaccurate data, excessive costs, and wasted hours.
Our platform has been transformative for both emerging managers and larger asset managers who use our AI-powered tools to automate critical workflows. From building customized asset screening and strategy development frameworks to calculating and benchmarking the precise performance contribution of each asset, strategy, or trader, to running detailed cost basis analysis and accounts reconciliation, our technology eliminates the need of having a team of analysts crunching numbers on Google Sheets, or devs running Python scripts for days, and allow clients to focus on making investment decisions and raising capital.
What innovation from the past 12 months are you most proud of?
Earlier this year, we launched Portfolio Lab, a game-changing product for advanced portfolio intelligence, backtesting, and benchmarking. This was driven by client feedback, which highlighted the critical need for detailed portfolio risk and performance analysis, especially as each portfolio manager prefers evaluating performance across different benchmarks and metrics.
We saw that PMs were spending days, sometimes weeks, normalizing data from exchanges, prime brokers, and DeFi pools, to run accurate analytics across trading strategies, portfolios, or investment narratives. The struggle to get consistent and accurate metrics like time-weighted returns, cumulative P&L, Sharpe ratios, drawdowns, and betas was real. The margin of error was high, and the inefficiency was painful.
Now Portfolio Lab provides PMs with instant access to all these insights. Whether they need to benchmark against standard indices or create custom benchmarks tailored to their strategies, Portfolio Lab provides a seamless experience. This all-in-one tool has proven valuable for multi-strategy funds and SMA allocators, allowing them to accurately evaluate strategies, backtest performance, verify returns from trading teams thanks to our historical trades fetching via API, and monitor real-time performance across various strategies.
This innovation has significantly improved the way our clients analyze and optimize their portfolios.
What are the most significant challenges facing the US hedge fund industry and how can technology help manage them?
Gaining investor trust is by far the most pressing challenge faced by crypto hedge funds globally. The investor appetite is real – but so are the concerns regarding quality of fund managers, risk management practices, and investment strategy resilience across market cycles. No investor wants to see their portfolio wiped out during a market correction or downturn.
Fund managers need to be able to show how they are using technology to implement processes that can be scaled with AUM and sustained across market cycles. How are you optimizing token or strategy allocations? Do you have visibility over your key drivers of risk across the portfolio? How are you managing liquidity and counterparty risks? Are you properly stress testing your portfolio and understanding how to mitigate the impact of sharp market drops? How can you showcase consistent and reliable alpha versus buying and holding a Bitcoin ETF? A robust technology platform like GenieAI’s PMS/RMS can help fund managers walk the talk, demonstrating in practice that they are leveraging superior technology that allows them to perform at their best and instill confidence in their investors.
For more info on GenieAI, visit www.genieai.tech
Federico Mele, GenieAI Co-Founder and CEO – Federico Mele is the co-founder and CEO of GenieAI, the industry-leading AI-powered portfolio and risk management system for digital assets. Over the years, Mele has assembled a team of experts in AI, finance, and crypto, and built an extensive network in the digital assets space. Prior to GenieAI, Mele worked as an investment professional for various New York-based private investment firms and as a strategy consultant specializing in M&A commercial due diligence for Private Equity funds. Mele holds an MBA in Finance from The Wharton School at the University of Pennsylvania and lives with his wife in Boston, MA.
