How the Hedge Fund Cloud Can Restore the Industry’s Mojo
The last few years have been undeniably tough for the once brash hedge fund industry. Recent headlines do not suggest any improvement with August being the worst month for hedge funds since October 2008, and marquee firms like Paulson & Company firm down 34% year-to-date. Prior to the crisis of 2008, the industry appeared to be on a steady upward trajectory, evolving from a small, scrappy upstart, that catered to high net worth investors, to a more formalized $2 trillion industry, that serviced the largest pension funds in the world. Since the crisis, however, the industry seems to have lost its way. What exactly happened and how can what we term the “Hedge Fund Cloud” return the industry to its former glory?
Institutionalize or Die
Pre-crisis, managers believed that the measure of success was not only returns but assets under management. In their race to acquire new assets, managers were motivated to “institutionalize” their infrastructure so that they could go after the really big allocations from large pension funds and endowments. For many firms this institutionalization meant leaving the relative simplicity of their single prime relationship to the much more complex world of building out their own multi-prime infrastructure. Almost overnight managers found themselves running complex and unwieldy businesses. Seemingly simple operations like adding a strategy, that required a new asset-class, or producing a new report, became long and involved IT projects. Any thought of outsourcing any of this burden was dismissed because of perceived privacy and control concerns.
Prisoners of their own Hedge fund Infrastructure
The actual crisis further exposed the inflexibility of hedge funds’ infrastructures. Managers struggled to view their true exposure across asset classes and multi-prime relationships. Just when managers most needed their former agility they discovered that they had become prisoners of their own expensive infrastructures.
Fast forward to today. We are still experiencing the after effects of the crisis. A strong regulatory backlash response has been unavoidable. There is still tremendous uncertainly about the true impact of these new regulations, but what is certain, is that the business of running a hedge fund will become even more complex and costly.
How can the industry remove itself from this funk and prepare itself for the next crisis? The answer is that the industry needs to return to basics by once again making alpha generation its sole focus. The industry needs to regain its former investment agility. In short, managers need to get out of the running-a-hedge-fund business and get back to the investment business.
The Hedge Fund Cloud to the Rescue
Fortunately, the Hedge Fund Cloud offers managers the opportunity to get back to basics. The Hedge Fund Cloud allows Read more
4 commentsPortfolio Management Software – Xignite Hit Calculation Examples
One of the most common financial applications of Xignite on-demand market data is portfolio management software. Portfolio management software is used by a wide range of Xignite customers including asset managers, wealth managers, hedge funds, financial advisers, broker-dealers and publishers of online portfolio websites. Each portfolio management software customer has unique requirements that vary across asset classes and update frequencies, however, the hit calculation required to select the right Xignite Web services subscription plans is essentially the same.
This is the third post in a blog series on hit calculation that will provide detailed example calculations for portfolio management software applications. The first post and second post in this series provided a comprehensive hit calculation tutorial as well as a general hit calculation spreadsheet. The examples in this post are also available in this sample portfolio management software hit calculation spreadsheet.
Single Hit Data Block for Portfolio Management Software
Every portfolio management software application Read more
No commentsMarket Data Feeds vs. Web Services – Why buy the cow?
Many of the folks visiting our website looking for market data have previous experience with more traditional (or as we like to say legacy) data feed technology, but have not used Web services. Or, they are new to market data in general and have difficulty cutting through all the technical detail and marketing-speak to make an honest appraisal of what is best for their application. If this sounds like you, then take a look at this quick side-by-side comparison below.
To make a sound business decision, you need to ask yourself the practical question of “Why should I buy the cow, when I can get the milk through the fence?” In truth, there can be very good reasons for buying the cow. For example, you drink an awful lot of milk. Or, maybe you are also a really big meat eater. But, if your business isn’t dairy farming, then you are usually better off just buying the milk.
One often confusing element that is worth clarifying is that on-demand Web services are not only Web services, they are also on-demand. That is, many market data vendors bundle application programming interfaces (APIs) in wih their feed products (often as a free add-on). And, some of these APIs may support Web service standards or at least provide XML formatted output. However, this does not change the business economics of buying data in bulk and deploying and managing the infrastructure to host and distribute it yourself, versus accessing it one transaction at a time over the Internet.
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