The results from our Global Hedge Fund Technology and Operations Benchmark Study are in and here is a snapshot of the 2013 findings. You can find the complete report here. We surveyed 538 buy-side firms across the United States, UK and Asia in order to discover their front, middle, and back office technology and application preferences.
All survey respondents fell into the following categories within the financial industry: hedge fund (60%), asset/investment manager (13%), private equity firm (8%), fund of hedge fund (5%), non-financial firm (5%), advisory firm (1%), broker dealer (1%), venture capital firm (1%), quant fund (1%), or ‘other’ (3%).
The firms resided into three different asset classes: 30 percent reported their AUM as $100 million and under; 32 percent fell between $101 and $500 million; and 38 percent reported over $500 million in assets under management.
In regards to investment strategy, long/short equity continues to dominate as the most favorable with (45%) of respondents reporting this to be their primary investment strategy. Other preferred strategies include fixed income (8%), credit (7%), global macro (6%), emerging markets (6%), distressed debt (5%), and event driven (4%). The top prime brokers employed by firms in 2013 are Goldman Sachs, Morgan Stanley, Credit Suisse, JP Morgan and UBS (same as last year).
Now let's look at front, middle and back office applications most commonly used at hedge funds.
They say a picture is worth a thousand words so here is an infographic of our 2013 Global Hedge Fund Technology Benchmark Study that explores the most common front, middle and back office applications and technology used at today's hedge funds.
Yesterday marked exactly five years since the infamous Bernie Madoff was arrested for executing the largest Ponzi scheme in U.S. history. As a result, Wall Street and the investment community has undergone a plethora of changes designed to avoid such scandals in the future. Let’s take a look at the lasting impact of Madoff and what changes we can still expect to see in the future.
Unless you’ve been living under a cave for the last several years, you’ve heard the name Bernie Madoff and understand its association with all things negative: scandal, fraud and disgrace. The former NASDAQ chairman and founder of Bernard L. Madoff Investment Securities LLC (BLMIS) swindled billions of dollars and affected more than 12,000 investors, faking investment returns over the course of multiple years.
Amidst the nation’s most serious financial crisis since the Great Depression, we all learned of Madoff’s devastating scheme. He eventually turned himself in at the urging of his sons and is currently serving 150 years in federal prison for his crimes.
At last week’s Hedge Fund Launch 2.0 seminar, the topic of the malicious Cryptolocker malware that is circulating was highlighted as a wakeup call for why backup and security are nonnegotiable IT components. Questions abounded about this new evolution in malware so today’s post aims to address the who, what, when and where of Cryptolocker as well as a few other common Qs.
What is Cryptolocker?
Cryptolocker is a new variant of ransomware that restricts access to infected computers by encrypting them and demanding that the victim pay the attackers a ransom in order to decrypt and recover their files. Some versions of Cryptolocker can encrypt local files as well as external hard drives, network file shares and even cloud storage services that allow local folders to sync with online storage. The malware is severe and a real threat. If a company becomes infected and does not have their files backed up the files may be lost.
At Eze Castle Integation we have had clients become infected. Thankfully in these cases the clients had the appropriate backup systems in place and were able to restore the files to the pre-infection state. As of this time, the US-CERT says the primary means of infection appears to be phishing emails containing malicious attachments. The attachments may look like legitimate emails, so it is important to remind users not to click on any email links if they do not know the sender.
As we look forward to 2014, we can expect that the hedge fund and investment management industry will continue to evolve and experience change as in years past. As more and more new funds launch, the competition for investors will increase and firms will be hard-pressed to live up to the successes of the top performing funds in the industry.
Earlier this week, we gathered several panels of experts in Boston to share their insights into the hedge fund landscape for startups in 2014 and the tips and advice for firms looking to compete in the changing marketplace. Following is a brief recap of the event.
Building a Hedge Fund is Like Building Any Successful Business
When starting a new firm, it’s critical to think about all aspects or forming a new business. Yes, your investment strategy is important, but if the foundation of your business is not critically thought out, it will wreak havoc for your firm. Following are a few areas you shouldn’t overlook as you go through the launch process.
Categorized under: Business Continuity Planning Cloud Computing Hedge Fund Due Diligence Hedge Fund Marketing Hedge Fund Operations Hedge Fund Regulation Infrastructure Launching A Hedge Fund Outsourcing Privacy Compliance Security Trends We're Seeing
Starting a hedge fund is an intensive task and there are many aspects of the business that a portfolio manager must consider. Expectations are higher than ever, and investors want to see that new hedge fund startups are taking the right precautions and steps to ensure that both the investment strategy and business operations are sound.
There are a wealth of considerations to review before starting a new hedge fund, and truth be told, most of these points are just as important to keep in mind if you are an established fund. Take a look and you’ll notice these best practices apply to more than just new launches.
Last month, former Secretary of Homeland Security Michael Chertoff said the most significant threat we face as a nation is cybersecurity. That’s a pretty jarring statement given the threats our country faces in terms of terrorism and war, for instance. But the reality is, cyber networks have become the gateway for risks both on the global terrorism front as well as within our internal circles at our places of business.
With watchful eyes geared towards security threats, interest in cybersecurity insurance continues to rise. The Department of Homeland Security and the Department of Commerce have identified cybersecurity insurance as a viable opportunity to thwart the effects of security breaches and attacks by:
- Promoting widespread adoption of preventative measures;
- Encouraging the implementation of best practices by basing premiums on an insured’s level of self-protection; and
- Limiting the losses that companies face following a cyber-attack.
First and foremost, Happy Halloween!
In honor of Halloween, I’m going to share a trick and a treat about the world of social media and investment firms.
First the trick.
Did you hear the story about how shares of bankrupt Tweeter soared when Twitter announced its IPO? If not, here goes. According to WallStreetInsanity, on October 4, 2013, “shares in bankrupt TWTR Inc. (OTC: TWTRQ) were up over 1500 percent as the company’s stock soared from $0.0 to $0.15 on extremely heavy volume. Seems some people thought the consumer electronics retailer was Twitter.”
This story demonstrates that traders are monitoring social media outlets for investment ideas even if they are not personally participating. It also shows that many of those folks buying TWTRQ didn’t quite understand how an IPO works or what Twitter will be valued at (certainly not pennies), but we’ll ignore that fact for the sake of this article.
This week Opalesque Radio featured an interview with Bob Guilbert, managing director here at Eze Castle Integration, on addressing operational challenges facing hedge funds with cloud solutions.
The 9:30-minute podcast covers a range of topics. You can listen to the full podcast HERE, just jump to the sub-features that interest you most below.
There has been a lot of discussion about, “best practices” lately when it comes to business continuity and disaster recovery planning, especially as we approach the first anniversary of Hurricane Sandy. In fact, I had to pleasure of speaking about some specific DR and BCP best practices earlier this week during a webinar, 10 Signs It’s Time to Rethink Your Approach to DR/BCP. You can listen to the replay here.
If you do a Google search for “business continuity and disaster recovery best practices,” you’ll get several options to choose from. However, if you are in working in the financial industry, the first resource you should consider taking a look at is the best practices guide published by the SEC, FINRA and CFTC in August 2013.
Sandy was a remarkable storm that affected many businesses along the East Coast, including hedge funds and investment firms based in the tri-state area. Post-Sandy, regulatory bodies including the SEC, FINRA and CFTC met with several registered advisors to ensure they were prepared for future disasters. Based on the findings, these organizations developed a four-page best practice guide for investment firms.
- 2013 Benchmark Study Reveals Top Hedge Fund Applications
- Painting a Picture of Hedge Fund Technology (Infographic)
- Five Years Later: How Bernie Madoff Has Transformed the Investment Industry
- The Who, What, When and Where of the Bad, Bad Cryptolocker Ransomware
- Expert Tips for Launching a Hedge Fund in a New Environment
- business continuity planning
- cloud computing
- data loss prevention
- disaster recovery
- eze castle milestones
- hedge fund due diligence
- hedge fund marketing
- hedge fund operations
- hedge fund regulation
- help desk
- high frequency trading
- launching a hedge fund
- privacy compliance
- project management
- real estate
- startup & relocation
- trends we're seeing
- videos and infographics