Automation: Manage Hedge Fund Effortlessly and Stay ahead of the Markets

As the world of business continues to change, pressures from investors continue to influence industry trends. As a result of increased fees and lower margins, improving operational efficiencies becomes even more necessary.

Does this have anything to do with hedge fund management and automation? Quite a lot as the industry is finding out.

In the competitive world for hedge funds and other forms of asset management, automating standard processes is an essential step for managers of hedge funds to differentiate themselves from the crowd.

The impact and transformative power of technology on business and client relationships make automation a must for asset management firms of all sizes and types - whether family offices, private equity funds, hedge funds, or fund administrators.

Managers are specifically investing in technology in the middle and back office to improve the speed and quality of data reporting and management. Ernst and Young reported that of hedge fund managers interviewed in a survey, 57% said their organization is investing or will invest in operational efficiency. In addition, 28% of investors said they would like to see their hedge funds become more innovative regarding their operational efficiency. 

Business Spectrum benefits

Over the years, fund accounting and middle office have developed to become the most advanced functions where managers invest in accurate and timely reports. On the other hand, the marketing and investor relations department is the least automated. This can be deduced from the EY 2020 Global Alternative Fund Survey, where nearly 65% of investors believe an investment in this area would benefit their future relationships.

By using technology to automate operations in the marketing and investor relations area, managers will enhance the investor experience and meet the needs of their clients.

One of the most significant benefits of automation in hedge funds is the power it gives managers to do more with equal or lesser resources. Good workflow automation optimizes operations at every stage, allowing managers to do more with the same or less staff, improve investor relations, improve reporting and regulatory requirements, making the manager more profitable.

Why now?

It is imperative that managers prioritize investor experience to stay competitive in the market. An asset owner told a recent EY global survey on alternative investing that managers should value people and their infrastructure more than costs. Hence, hedge funds need to free up time and use the right tools to deepen client relationships.

Automation and integration of communication and collaboration tools can provide hedge fund managers with a more comprehensive understanding of their investor journey, allowing them to identify better ways of attracting and retaining investors. 

Multifaceted solutions for diverse needs

The smooth operation of a fund is dependent on multiple systems communicating on the back end, which is why fund managers require a centralized, automated terminal that enables them to create a fund swiftly, manage personnel and resources, and optimize processes to ensure flexibility and scalability.

Hedge funds can do this either through internal development or by partnering with a service provider like MetaQuotes Ltd., which provides a comprehensive set of solutions, including automated tools for hedge funds. 

An administrative terminal on MetaTrader 5 for hedge funds, for example, permits managers to create funds and financial instruments in less than five minutes, automate fund and fee calculations, and select shareholders and investors to the fund and amount of shares they hold.

While investors may be satisfied with their managers’ technology implementation, there is certainly room for improvement in the automation of various other functions. Automating hedge fund operations makes sense because investors and other constituents expect that manual processes can and should be phased out.