4 Software Essentials for the Hedge Fund Industry

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By Tom Dillane Director of Product Integration
March 22nd 2023 | 3 minute read

Software advances in everything from front-office trading to back-office investor servicing have transformed the hedge fund industry, helping managers and their administrators achieve the competitive edge they desperately need. But some system capabilities are more indispensable, and will have greater impact, than others.

So here are four technology guidelines to help optimise your IT strategy and obtain the target operating model that will set you up for success.

Portal 2.0

Portals were once a service afterthought, just a means of presenting reports online. No longer.

They are now a critical – and often the most important – way for hedge fund managers and fund administrators to service their clients. Yet many portals don’t have deep hooks into the back-office systems that allow them to offer the comprehensive experiences users seek.

Today, the portal needs to be a properly integrated part of your core system, offering a full array of interactions: delivering fundraising information; facilitating online onboarding and know-your-customer (KYC)/anti-money laundering (AML) checks; tracking and managing subscription applications; allowing online order entry and two-way document sharing, along with self-service access to real-time reports.

Relevant technology for your business

What is your firm’s business focus? Where is it heading? Are you targeting open- or closed-ended funds? Is your business shifting to a hybrid model incorporating private market investments?

Firms need to spend time defining their mission statement, specific objectives and future roadmap, and understanding the processes around those to identify the matching technology requirements.

It’s easy to get caught up in “shiny object syndrome” when assessing vendors’ software offerings. But a handful of nice features don’t necessarily make an application the right long-term choice for your organisation.

Technology purchasing decisions work best when you have a pointed set of needs and clear criteria for how they can be met, and then apply those requirements to the offerings available. Can the software automate and streamline your firm’s current activities? Does it give you the flexibility to expand into different markets, different asset classes, different strategies? Will it handle your planned volume growth – and beyond?

Asking such questions will save a lot of time kicking the tyres of products that don’t fit the bill.

Minimise the technology infrastructure

End-to-end automation – industry participants’ ultimate goal – rests on adopting effective technology solutions at every stage of the hedge fund chain, from portal-powered investor interactions to trading, fund accounting, transfer agency and reporting.

Instead, an all-too-common outcome (as many industry participants have discovered) is a system spaghetti of overlapping, unintegrated solutions that don’t properly speak to each other, create workflow inefficiencies and duplicate cost – issues that are magnified when those infrastructures are replicated across asset classes and business lines.

No single platform will cover all your enterprise technology needs. But functionality-rich, multi-asset class and multi-jurisdictional capabilities, underpinned by intelligent workflow management tools to maximise process automation at every stage of the transaction and investor lifecycle, will allow you to streamline your technology environment.

Partner with software providers

Build partnerships with your IT vendors. Pure transactional-style relationships with service providers will leave you ill-equipped to thrive in a fast-changing world.

Many years’ experience has shown us that the clients that see most success are those that work closely with their technology partners.

For one, a collaborative approach based on frequent communication will help you leverage the functionality of your systems to the full. Working together to achieve continuous, maximum return from the solutions and services you’ve selected is in everyone’s best interest. Second, by keeping us apprised of your business objectives and long-term roadmap, we can consider clients’ current and future needs in our ongoing product development plans.

Replacing an existing piece of technology is not a project to take on lightly. The process can be expensive and painful. Look at the system capabilities you have and where as a business you want to go, then determine if your vendor can support your ambitions. If yes, work together to create the best solutions possible. If not, it may be time for a new partnership.

Deep Pool is the #1 investor servicing and compliance solutions supplier, providing cutting-edge software and consulting services to the world’s leading fund administrators and asset managers. Our flexible solution suite, developed by an experienced team of accountants, business analysts and software engineers, supports offshore and onshore hedge funds, partnerships, private equity vehicles, retail funds and regulated financial firms. Deep Pool is a global organisation with offices in Dublin, Ireland, the United States, the Cayman Islands and Slovakia. For more information, visit: www.deep-pool.com.

Tom Dillane
Tom has set up the data office at a fund admin which enabled data-based decision making at an exec level across all pillars from revenue to cost, marketing, resourcing, & product. He built out an analytics department in parallel to embed a scalable function for best-in-class product & application management.