Increasingly sophisticated risk management requirements and demands from Limited Partners (LPs) for more transparency are daily challenges for hedge funds. But too often they have to rely on a combination of legacy systems that complicates or even prevents them from optimizing business management. The solution is a dashboard that brings together the output of those various software systems, creates a unified vision across portfolios and puts the decision makers and risk takers firmly in control. But the benefits don’t end there, as David Cassonnet, Global Head of Business Development at ActiveViam, explains.
Making faster decisions in a complex environment
Competition among hedge funds has never been greater, and senior managers are looking for any way to steal an advantage over their rivals. That advantage might come from higher returns, better risk management or greater transparency for client reporting – all of which can translate into an enhanced ability to raise new funds. LPs’ demands of fund managers continue to grow, and the ability to evidence risk control and then report in a timely and accurate fashion are key to providing investors with a level of comfort and capturing new funds.
At the same time, managers of fast-growing hedge funds often find themselves hitting the technology ceiling with their current systems. The collection of software solutions they use to calculate performance and margin or to measure risk are normally the product of individual decisions taken when the business was much smaller. But an assortment of legacy software that worked for a US$500m AuM fund can become a major limitation when the fund is hitting US$5bn – especially if those systems cannot “talk” to each other.
The situation is even more complicated for multi-strategy hedge funds based on a platform. The managers on that platform will each have their own systems, but the multi-strategy manager needs to aggregate the individual systems to give an overall view at the platform level.
Faced by these challenges, hedge fund CEOs and other C-Suite are increasingly looking for the ability to view their business through a single dashboard, with the ability to perform deep-dive analytics on the data. They want to be able to ask – and answer for themselves – key questions without the need to rely on the IT department. And it is essential for them to do all this virtually in real time. Pull all those requirements together, and what hedge fund CEOs now need is a tool that combines flexibility, visibility and the ability to aggregate data at scale.
But can it be done and in real time?
How Atoti meets hedge fund needs
Atoti can continuously perform multi-dimensional calculations at very advanced speed and instantaneously analyze the data as it changes. It also allows senior managers to set limits on risk-taking within the business, and to set alerts if (or when) those limits are broken.
But the value that Atoti can bring doesn’t stop with the C-Suite. At all levels within a hedge fund there is a need for fast decision-making based on informed insight. Portfolio managers need the ability to make split-second decisions and seize the opportunities that they identify. Their returns depend on it.
Atoti provides traders and portfolio managers with the ability to perform train-of-thought analysis on the most complex datasets – by helping to aggregate, organize and visualize the data. Users can also see the potential impact of new trades on the portfolio, then break down complex risk positions to create a full and complete picture of their risk and return. The flexible aggregation provided by Atoti enables interactive analysis for end-users to really interrogate the data, from the high-level, cross-fund numbers down to the individual position.
Hedge funds will appreciate how they can use this functionality to control their businesses better. But they will also recognize the potential benefits of this approach throughout their operations, in terms of better insight, better risk management and more successful pursuit and capture of Alpha.