The Future of Software for Hedge Funds

The search for the best software for hedge funds continues as institutional investors and regulatory boards demand that firms be able to demonstrate sustainable growth and operational credibility.

Investor demands

 In the last few years, institutional investors continue to supply majority of the assets managed by hedge funds. To keep attracting these big institutional investors, hedge funds must build their operational credibility through software systems that can sustain growth and profitability in the long term.

Although high returns remain the most important factor in raising investment capital, investors are becoming more and more concerned about how robust a firm’s operations are. For them, operational strength shows that a firm has the capacity to control risks and is geared for maximum growth.

Regulatory requirements

Lessons from the controversy-filled past of the financial industry have been piling up, and as a reaction, regulatory bodies replacing more and more compliance requirements for hedge funds. As these requirements continue to evolve, it has become critical for firms to integrate a reliable technology infrastructure for their everyday investment activities.

Integrated systems

To fulfill the demands of both regulators and investors,the front, middle and back office operations of hedge fund firms have to become more integrated. Most importantly, a hedge fund’s portfolio management and accounting system should be well integrated. This is critical in achieving more streamlined and sustainable operations. Integrated technology systems will also simplify data management, another growing concern for the industry.

As of now, most technology solutions for hedge funds remain specialized. In the next few years, we expect the financial technology industry to come up with solutions with a bigger scope.

Transparency and accuracy

Aside from integration of technology systems for smoother operations, there is also a need for more hedge fund software that could advance data management and promote transparency and accurate reporting. These software systems must be able to transform data on the go or as the need arises. Firms must have the capability to show information to investors or regulatory boards in real time, to gain trust and secure their reputation.

The future of hedge fund software

In the coming years, the hedge fund industry will need an integrated technology platform that can support the full investment cycle of hedge funds and alternative asset management firms. Future software for hedge funds must be customizable and should include solutions for front, middle and back office. Hedge fund technology providers should continue to strive for simplicity and integration, if they are to become an indispensable asset for hedge fund firms.