In times of market uncertainty, risk functions at prime brokers (PBs) manage their client risk exposures more dynamically. Their role is to ensure enough margin is charged and collateral is held in a variety of “risk-off” scenarios across the spectrum of hedge fund trading strategies. 

The proliferation of data is now an accepted fact. As growth projection rates of data hit 60% year on year, building a solid data foundation and knowing how to make the most effective use of that data becomes a critical focal point that will help a business achieve its broader goals.  “Hedge funds need to have an ambitious plan to keep up with the growth in data,” advises Alex Dobson, senior vice president of product at Arcesium.

Following several waves of evolution, the research market landscape has witnessed the growth of modern RMS solutions which are built to grow in line with the funds they service. Going forward, interoperability and adaptability will define the future of these solutions.

As the rate of data proliferation intensifies, hedge fund managers are increasingly leavening their discretionary approaches with quantitative methods in order to better utilise the available data.  “Traditionally, the idea was that asset managers were either discretionary, making investment decisions in a less systematic way, or they were quants – susceptible to criticism for following a too strict rules-based approach.

An increasing sense of urgency for data and reporting among investors is sharpening the focus on quality to ensure excellence is preserved as client demand for speed rises. The way this data is delivered is also changing in view of investor needs.  “The push for delivery of financial statements and other deliverables as quickly as possible has increased significantly,” notes Jill Calton EVP, Executive Director Alternative Investments, UMB Fund Services, underscoring the growing calls for more for transparency alongside these shorter reporting deadlines.  This increasing sense of urgency can impact quality if not managed appropriately by administrators.

The credit arena is expanding, buoyed by investor appetite for private credit and similar asset types. As managers look to enter new markets and offer investors new, potentially more complex asset classes, their need for greater operational flexibility and broader accounting support is growing.

The approach to cybersecurity is shifting as the risk of data leaks has become more commonplace. Hedge funds and financial firms also need to ensure they implement consistent and continuous training, monitoring and testing to contend with ever-changing, creative threat actors.

Compliance requirements for hedge funds have been on a steady upward trajectory since the global financial crisis. In some cases, this has led to the breakdown of a tangible connection with portfolio managers, as the business is often too concerned with ensuring nothing is missed.

The treasury function within a hedge fund can provide meaningful additional value and cost savings, if it is managed in an effective and efficient manner. However, many managers are not yet prioritising it, to the potential detriment of their investments and their clients.