Microsoft Copilot’s Most Impactful Use Cases – Part 2: Hedge Funds

We’re making our way through some of the most impactful use cases in the financial services space for the AI-powered Copilot for Microsoft 365. Our previous post put the spotlight on investment banking. Now let’s turn our attention to hedge funds, and how Copilot is transforming everything from hedge fund trading, portfolio management and research, to back and middle office functions, compliance, investor servicing and more. 

Copilot Turbocharges Hedge Fund Trading, Portfolio Management and Research

The hedge fund industry is a pressure cooker environment of strict compliance demands from regulators and heightened expectations from investors. On the regulatory side, new rules from the SEC in the U.S., Europe’s Digital Operational Resilience Act (DORA) and other regulators require hedge funds to be more transparent in their operations and, especially for this sector, their risk management controls.

Meanwhile, investors demand more data and analysis on liquidity, valuation and exposures to assess both risk and opportunities. Gone are the days where simple alpha long/short equity strategies are sufficient. The complex, multi-asset strategies that investors favor today require heightened power and agility in trading, portfolio management and research – and that’s where Copilot can help. The AI assistant can consolidate structured and unstructured data for sophisticated, strategy-specific research and reporting – with the ability to ask real- time questions of the data to evaluate market trends, risks and investment opportunities. 

Copilot will also link to proprietary third-party data sources for pricing and scenario analysis; and it can compare new research material with that of competing brokers or against historical data to analyze changes over a period of time. Throughout, Copilot can be configured to generate monthly or quarterly performance reports, including P&L statements, balance sheets and other financial metrics. This all happens automatically and in a way that saves time and ensures accuracy.

Copilot Fuels Efficiencies Throughout the Hedge Fund Operation 

Copilot’s benefits go far beyond just the key activities of trading, portfolio management and research. Hedge fund analysts and other business users can leverage the AI assistant for a range of time-saving use cases more deeply across the organization – from back-office functions and accounting, to HR, legal, compliance and investor servicing. Here are just a few examples:

• Fund Admin Reconciliation – Copilot will automatically pull in data from your administrator and reconcile in Excel to your own internal data or books and records – including creating discrepancy summaries and sending e-mail recaps to internal teams.

• Position, Cash and Transaction Recon for Prime Brokers and Counterparties – Copilot combines data from both prime brokers and counterparties to automatically reconcile back to OMS/PMS, summarize discrepancies and automatically notify the appropriate parties for investigation and resolution. The AI assistant can also look across all counterparty and ISDA documents to summarize terms and identify outliers or common threads of risk.

• NDA and Legal Document Comparison and Analysis – Copilot will compare commonly used documents like NDAs and fund agreements to summarize key differences or where they deviate from the norm or standard templates being used. In the same way, Copilot can conduct automated policy document revisions to reflect regulatory changes and enhance compliance document organization and archiving.

These examples are all in addition to the multiple ways Copilot transforms everyday use of Office 365 applications and tools for more efficiency and optimization – from automatic email drafting in Outlook and collaborative notes in Teams, to content creation in Word, slide generation in PowerPoint and automated document search across OneDrive and SharePoint. Particularly useful for hedge funds is Copilot’s ability to compare multiple Excel files and display or drill into drivers of deltas that help in developing trade models and assessing cost of capital and other advanced analysis.

The best way to reap all of these benefits is to leverage ECI’s Copilot support services. Informed by ECI’s unique status as a Microsoft Gold Partner MSP specializing in financial sector clients, our Copilot support services provide the configuration and management expertise required to fully leverage Microsoft 365 Copilot in the highly regulated, complex and demanding IT environments of hedge funds. Learn more about how ECI can help!