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Hedge funds move to cloud to manage data
25 November 2011
As hedge funds face increasing transparency demands, many are looking to cloud computing solutions, according to Conifer Group.
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Hedge funds are increasingly looking to cloud computing solutions to manage their data as they face more transparency demands, according to Jack McDonald, president and chief executive of Conifer Group.
Conifer is the first to provide a cloud-based transparency product for hedge funds which allows them to run investment operations through a browser without needing an in-house technology infrastructure which can be costly.
The newly-launched Conifer iCon is the first cloud-based solution to deliver a whole suite of asset servicing processes from one customisable portal.
There has been some reluctance in the financial industry to replace in-house solutions with cloud-based products, due to concerns over the cloud’s security and data privacy. But McDonald said this is changing rapidly:
“Our industry is a bit further along the line in Cloud adoption than people think. Cloud technology is an inevitable trend.”
The argument for moving to a cloud solution is that in-house technology can be very expensive and usually involves a lengthy
implementation process.
“Cloud technology enables functional enhancements to be completed at a fraction of the time and cost typically required by an enterprise-based system,” said Conifer.
The firm has been trying to find the best cloud solution following a three-year development programme to access the changing needs of asset managers.
One of the firm’s discoveries was that asset managers are facing more demands for transparency from their investors.
“As investors continue to clamour for enhanced performance reporting and transparency, accurate and timely risk and attribution reporting has become a top priority for hedge fund managers,” said McDonald.
He said Conifer’s new cloud solution will help managers to meet increasingly complex reporting requirements by enabling users to compile, compare and analyse historical and real-time market data in a customisable and detailed way.
A second priority for hedge funds is to provide better performance reporting for their investor base by showing exact security level attribution and contribution, says McDonald. “Markets are becoming more difficult to navigate and managers will benefit by utilizing these portfolio management tools.”
Conifer said its iCon solution can enhance asset-level risk and attribution reporting which it says is critical in today’s volatile markets.
The firm is currently focusing on its traditional hedge fund client base but it is also looking to target other funds as cloud-based asset servicing platforms grow more attractive.
“The core need for this kind of solution stretches out to other asset managers, and we’ve seen interest from larger hedge funds, family offices, pension funds and endowments,” said McDonald.
“Asset managers need to aggregate data from disparate sources, including market data feeds, multiple counterparties and multiple fund vehicles, in order to meet the evolving needs of their investors,” he added.
However, uncertainty over security still haunts the cloud technology industry as some firms argue that in-house solutions are safer because they have more control and their infrastructure is less exposed. One of the arguments is that cloud solutions are more accessible through the internet and are shared by multiple users.
Another factor that could raise security issues is that Conifer iCon users will have “anywhere, anytime web access” to the solution through iPhones and iPads. McDonald said this far from the truth:
“Content is protected in our private cloud, with security protection extending to the devices people use to access their custom reporting portal.”
Conifer's clients will be migrated to the platform over the next few months and, according to McDonald, those that have seen the product are “very excited” about the move.