Technologists are responding rapidly to the operational demands of hedge fund managers as COOs and CCOs search for greater simplicity in an increasingly complex business environment. Compliance and regulatory demands are manifold. As such, managers need the confidence, and, importantly, the customisation of software solutions to help them integrate their operational workflows. 

With institutional dollars now dominating the hedge fund industry, managers are facing far more stringent operational due diligence assessments. Pension funds and endowments are hiring dedicated ODD teams simply to go in and find reasons not to invest in managers. The bar, when it comes to raising capital, has never been higher.

“The major changes we see are in demands for access to data and demands for accuracy. Our clients want to see data more in real-time, anytime, anywhere. There is a lot more information that has to be managed and accuracy is required,” observes Bob Forsythe, IT Manager at UMB Fund Services. 

There has been an acceptance across many top-tier hedge funds that some of the operations they perform, whilst important, are not clear differentiators but rather diversions to their core task. 

The word “innovation” is used far too casually, not just in financial services but across industries. At Advent Software, a pioneer of fund accounting technology for more than 30 years, the focus isn’t on delivering innovation for innovation’s sake. Rather, it is on taking a forward-looking stance, understanding where the industry is headed and listening to its clients’ needs.

As the asset management industry continues to grow, driving investors’ appetite for more transparency, reporting and risk controls, the biggest challenge hedge fund managers face is how to create scale. 

According to Alexei Miller, head of the Financial Services practice and managing director at DataArt, a technology consulting firm that designs and builds custom software systems, data and data management remains front and centre of managers’ minds in the alternatives industry. Regardless of their size, hedge fund managers face the same data management demands, which is leading to a lot of data-related projects and keeping Miller’s team busy. These projects range from data acquisition, data cleansing to customising data feeds and data visualisation. 

New York-based Imagineer Technology Group offers award-winning solutions to help hedge fund managers address the transparency and workflow demands necessary to stand out and succeed in today's marketplace. 

Confluence is a data management and software company whose heritage lies in US mutual funds. The firm started out providing technology to automate the calculation and distribution of NAV prices for US mutual funds. Over time, the Confluence platform has grown to encompass financial reporting, expense management, regulatory reporting, etc. 

Hedge funds today expect their appointed administrator to do a lot more than merely strike the NAV and keep the Investment Book of Records up-to-date. Value-add services, such as data management, regulatory and compliance, risk, and performance and attribution – all of which utilise the same underlying dataset – are becoming an increasingly important diversifier. 

Over the last two decades there have been significant limitations in the way that technology to manage swaps processing has been deployed to hedge funds.

On 15 April 2015, Cordium, a leading global compliance consulting, accounting, tax and software provider to the financial services industry, introduced a new compliance software solution called Pilot. 

In the last few years, market complexity has grown in response to increased regulatory demands, increased investor due diligence requirements, more complex fund strategies and even how hedge funds manage their balance sheets with their prime brokers.