Eze Castle Integration, Inc. the provider of IT services, technology and consulting to hedge funds and investment firms, has released its 2011 Hedge Fund Operations & Technology Benchmark Study of more than 220 hedge funds and alternative investment firms. The Eze Castle study provides insight into the operational decisions being made by fund managers, examining their use of technology to meet investor and regulatory requirements.
The combination of preparing for regulations and the demand for greater investor transparency is resulting in a strong focus on deploying and optimizing technology to manage, protect and more effectively use data, from the front to back office.
Report findings on front office operations and technologies focused on order and execution management systems, market data and analysis tools, and research management software. Key data points include:
* Market Data: The vast majority of firms use Bloomberg for their
market data, however Thomson Reuters continues to be a
significant player in the market.
* Market Analytics: Forty-three percent of firms use multiple vendors for market analytics. The most popular combinations were Bloomberg with Capital IQ and Bloomberg with Thomson Reuters.
* OMS/EMS: BNY ConvergEx's Eze OMS was the most widely used system among respondents.
Middle and back office operations are being more closely scrutinized as investors expect sound operational practices that minimize investment and headline risks. Additionally, the Dodd-Frank Act is contributing to back office technology adoption of email and instant message archiving. Additional findings include:
* Portfolio Accounting: Advent is the most popular vendor among
survey respondents, however it is a diverse market with multiple
other vendors cited.
* Risk Management: Respondents use a broad spectrum of vendor solutions while 19 percent cited using either Microsoft Excel or a proprietary in-house system.
* Mobile Devices: BlackBerry is used by 95 percent of respondents; however, signs point to an increase in iPhones, iPads and other tablets in the future.
* Instant Messaging: AOL Instant Messenger is used by 76 percent of respondents, however many use it in addition to other IM platforms including Bloomberg Messaging or Yahoo Messenger.
"As the leading technology partner to the hedge fund industry we pride ourselves on our ability to guide firms through the myriad of technology solutions available. Our benchmark report provides guidance on today's top priorities, trends and technology buying decisions for investment firms so they can make informed decisions that strengthen their operations," said Bob Guilbert, managing director at Eze Castle Integration. "Firms can look to Eze Castle Integration to provide the critical resources and support for optimizing their technology to mitigate risk, prepare for the future and achieve daily operational excellence."
Of 223 total firms who responded, 56 percent had assets under management (AUM) less than $250 million. Seventeen percent of respondents had an AUM of between $250-750 million at the time of the survey, and 27 percent had more than $750 million in assets. Other demographic information includes:
* The majority of firms have one office location, which is in the
United States. Only about one fourth of firms have an
international office and/or multiple office locations.
* Thirty-five percent of firms use a multi-strategy approach; of those firms, more than half said they trade Long/Short Equity as part of their strategy set.
* There was little to no variance between primary and secondary prime brokers, with Goldman Sachs, Morgan Stanley, JP Morgan and Credit Suisse maintaining a stronghold over the majority of firms.