Selecting Data Management Systems

More alternative investment firms are grappling with the need to improve the quality and timeliness of their reporting, largely driven by the shift to using multiple prime brokers, the complex registration process, and the growing sophistication of investors. Each firm has its own specific requirements for internal reporting and investor transparency, but they all share the realization that increased demand on their operations staff is costly and unsustainable, and for some, their reliance on spreadsheets has become too cumbersome and risky. While global multistrategy funds may have different needs than strictly U.S.- focused long/short equity funds, both types—as well as private equity, asset managers, and venture capitalists—have the same question: How can I better manage my data and get the information I need when I need it?

There are several types of systems that come into play when alternative investment firms are looking to consolidate reporting and aggregate data. The major categories are portfolio management, order management, execution management, portfolio accounting, and risk management. In most cases, these systems may send feeds to each other, but they are usually independent which necessitates the creation of manual or home-grown reporting using Excel or other applications. Older and more established firms may have a mosaic of systems stitched together by their software development teams, and they also may have created proprietary report delivery applications. To make the situation even more complex, the functionality these systems deliver is becoming less compartmentalized and there are significantly more overlaps.

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