Beacon Platform: Hedge funds use advanced technologies and system integration to improve risk visibility

Beacon Platform: Hedge funds use advanced technologies and system integration to improve risk visibility

December 4, 2024

Hedge Funds Technology
Technologie (02) cloud

New global research by Beacon Platform Inc. shows that advanced technologies and system integrations are playing vital roles as hedge funds strive to improve their visibility in an increasingly risky and volatile investment environment.

The surveyed hedge fund executives were asked to rate the importance of five essential risk management capabilities. Almost all of those surveyed (93%), described seamless integration with existing systems, including compatibility with current tools and near-real-time data on positions, PnL, and risk, as an important or very important source of competitive advantage of their systems. Advanced technical features, such as cloud-based architecture for scalability and integrated development environment for proprietary models and customisation, were the next most important (87%).

To identify the leading funds, executives were then asked to rate the competitiveness of their existing systems. Surprisingly, the study by Beacon Platform Inc., with 100 executives in the US, UK, Germany, Switzerland, France, Italy, Sweden, Norway, and Asia responsible for a collective $901 billion assets under management, found that just 20% of those surveyed describe the competitive edge gained from their portfolio analytics and risk management system as 'Excellent'.

Integrated systems are playing an important role in competitiveness and risk visibility. Half of those who rated their competitive edge as 'Excellent' said their systems were extremely well integrated, compared with just 5% of those who had a 'Good' competitive rating and none of the 'Average' funds. Similarly, 60% of the group with 'Excellent' risk visibility said their systems were extremely well integrated, compared with 10% or less of the 'Good' and 'Average' funds.

All of the funds who described their current system as excellent were more likely to have increased their risk management budget dramatically over the past 2 years (55%), compared to 13% of those who describe their system as good, and just 6% of those who rate it average.

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