FIS Blog

Hedge Funds are at an Operational Fork in the Road


Jonathan Moore | Monday, June 26, 2017

When it comes to operational processes, hedge funds and other types of asset management firms are at a fork in the road: hold on to a labor-intensive operational environment or outsource to a trusted partner so they can redirect resources to optimize fund performance.

One road leads to smarter performance, while the other leads to uncertainty and higher cost pressure. The future of your firm could depend on making the right choice.

The first operational path may look tempting – it takes you down a familiar-looking road. The hedge funds that go down this path are comfortable with the status quo and with running their operational business processes on their own. These hedge funds will move more slowly toward the future – they’re weighed down by a heavy operational environment that may be inflexible or lack scalability. This is a tough, expensive path to take.

Firms that take the other path know they are in the business of achieving smarter performance and that their resources are best spent optimizing their funds to yield stronger results.

A key change in operational thinking, firms on this path know they don’t go it alone. They bring business process experts along for the journey who can take on the tasks of the middle and back office so that they can focus on their core strengths in the front office. These funds can rise to the future faster and have greater potential to take advantage of opportunities because they aren’t constrained by the costs and resources needed to keep their processing moving.

Wouldn’t you rather be the firm on the second path?

With pressure on fees, increasing competition and challenges to achieve stronger performance, hedge funds will need to optimize their processing environments to become significantly more efficient.

The best way to do this is by outsourcing business processes to a reliable, expert partner so you can focus on results and growth. Think of if this way: would you rather invest in a strategic hire on your investment team or allocate more resources to operations? The key to more efficient business processes is overhauling the way hedge funds think about operations, not investing in overhauling in-house operational systems and teams themselves.

The alternative investment funds that will rise in the future are taking a smarter look at their operational processes today. As a hedge fund, you’re at the fork in the road: so, which path will you take?

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Tagged in: Institutional and Wholesale, Asset Management, Hedge Funds

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