• Current hedge fund issues
  • Review of the ready-made software for hedge funds
  • How to prepare your fund for the future?

A hedge fund is mostly about growth management for making deals in any market, as well as advanced analytics, forecasting and rapid decision-making tools. According to the Intertrust Group’s recent survey research, the amount of data managed by the funds is going to be slightly increased. 65% of hedge fund CFO respondents believe that the investor reporting demands are expected to rise in the next 5 years and funds should get ready to scale up. Not all funds and investors will be able to perform steadily in the face of market changes, data growth and competitor progress.

Current hedge fund issues

In the course of in-personal communications of a fund manager and an investor, there are five main issues preventing both sides from quickly optimizing and responding to market challenges.

  1. Complicated and inefficient managing tools. Manager objectives include establishing the fund, controlling operations and editing access/fee rates levels of numerous accounts. Just imagine how much time it takes to establish a new fund with assets and connect a dozen of traders. The matter is greatly slowed down by the messy UX/UI experience, which is a common trait of hedge fund CRMs. This issue is also a big entry threshold for a new user.
  2. No proper accounting and performance reporting. Right now it is difficult to find a fast monitoring solution: investors need to check the AUM performance on-the-go to make the in-time assets performance decisions or perform a fast call to the fund manager. Some fund managers still use hand-crafted reports prepared in XLS containing mistakes, which you still need to wait for an unknown amount of time after making a request.
  3. Data hypothesis generation takes a lot of time. Same as the point above, some available solutions are not focused on the built-in automatic solutions for algorithmic trading and data-driven hypothesis creation having low back-office hardware capabilities or even requiring manual document research.
  4. Expensive costs or ineffective ready-made software.To hire a fund administrator and establish the back-office, the first year cost starts from $5000 to $20,000 while the fund software solutions, like FundCount, are starting with $500 monthly “sandbox” fee per account. Most of the ready-made services will deliver you a plenty of bugs or unexpected technical restrictions because of the insufficient level of the development team.
  5. Limited market view and customization. One CRM does not give investors needed access to crypto currencies, while another one lacks property trading. It is necessary to establish quality integration for all the markets from the box.

In conclusion, a modern hedge fund needs to be both transparent but controlled structure, basically featuring fast communication and data-driven hypothesis generation powered by stable software and managed by a skilled engineering team.

Review of the ready-made software for hedge funds

No balance between scalability and good price

There are plenty of ready-made commercial products for hedge funds like fund administration services FundCount or Northstar Risk starting from $10,000 to $40,000 per user annual subscription payment. Those are expensive and both less scalable considering that the market is constantly growing, while account limits remain.

Interfaces are not user-unfriendly

Some solutions, like StockMarketEye, are trying to bring the proper experience with a neat looking interface, however, there are problems with mutual funds tracking and interface glitches. The PackHedge platform offers a complex accounting solution, however the professional knowledge of SQL language is a must to perform the advanced tuning.

The only solution for transparency

Fund managers are still losing time with Excel reports and manual data research. Right now there is no solution on the market to make the assets progress transparent except the MetaTrader 5 hedge fund platform with their real-time fund performance monitoring for investors available for any device and any platform.

Cloud solutions are the point of growth

Dynamo platform presents a cloud-based solution with customization alongside slight interface issues. The new MetaTrader 5 uses a growing MQL5 cloud network alongside the marketplace featuring more than 13,000 pre-built algo trading solutions.

How to prepare your fund for the future?

The hedge funds will still have to make their choice between inhouse CRM development, ready-made platforms and combination of tools, basic Excel reports, interface tuning and basic data analysis. However, they need to move further in a technological and data driven way. Below is the check list  of their objectives for the next 5 years.

1. Choose a flexible CRM for your fund manager

There must be a simple and fast way to create, manage and increase the performance of the fund assets. It is possible to build a new fund from scratch with the presets, expand the list of traders and provide results to your investors fast. Navigation should become easier to save time.

2. Establish the clear and adaptive way to report

Investors need access to all the important data on the go from any platform and any device. There are not so many solutions which bring real-time transparency of the assets. Moreover, there should be an option to get different types of reports for risk management issues.

3. Generate hypothesis from market data with cloud computing

To test market hypotheses and receive the result, you need to establish the hardware or cloud-based solution to receive the needed hypothesis with the least time spent. To reach the quality data research level with algo trading and math models, you also need to establish a team of analysts, Python engineers and the product-oriented mindset above all else.

4. Create the unified technical structure

A strong, scalable and optimized structure with the front- middle- and back office is needed. It is necessary not only to calculate a budget for the development of the software environment, but also a payroll for its growth, development and support. However, there are already developed all-in-one solutions: it is important to choose such a platform counting on its engineering team experience.

5. Use the approved built-in market hubs

The modern hedge funds are flexible structures with the request to access any stock or market, including cryptocurrencies, entire companies or any other value. Therefore, it is necessary to establish ready-made solutions for the fast integration with any market or exchange on the global level with proper risk management tools.