A Complete Solution for Fund of Funds Manager

A potential client’s entire investment business, from initial screening to portfolio management to analysis to management reporting, was dependent on the manual entry of financial data into static spreadsheets. Normalization of data, maintaining accuracy of data, and timeliness of data were all problems. The client needed a new data management system that solved these problems.

The Challenge

The client’s investment strategy was straightforward and had been successful: manage risks by investing in a pool of exceptional hedge funds, balancing returns, managing risks, and correlation factors across strategies.

The fundamental problem was that aside from performance results, hedge fund manager data was sparse and varied widely. The client had attempted to solve this issue with a team of researchers, who manually updated Excel spreadsheets to track portfolio exposures and other risk measures across investments. However, the high-frequency efforts were time-consuming and were potentially error-prone because the hedge funds reported with a lack of consistency and in an asynchronous manner. There also was no automated validation of data interpreted and recorded in Excel.

There was a clear need for a central database. But lacking dedicated, full-time IT personnel to develop an internal database, the client deemed traditional data warehouse products too big and expensive for its needs.

The Solution

The client engaged Data Agent to build an automated environment, nicknamed Slingshot, to solve the information overload problem common to hedge fund investors. This platform required Data Mart and Data Analytics to be integrated with a third-party database and a CRM tool (PerTrac), as well as with the client’s existing spreadsheet architecture. By using Data Mart’s flexible data model and information delivery capabilities, the client could not only reproduce its existing analysis but also customize contemporary and historical information in reports that had previously taken days to build and update.

The client used the following features and functionalities, which are prebuilt into the FF-Suite:

• Data loaders and adapters for fund data and for real-time market data
• Data Mart’s security master for data aggregation
• Data Analytics for incorporating existing financial models and for advanced data visualizations and analysis
• Data Reports to expand reporting capabilities for internal investment analysis, internal management reporting, compliance reporting, and customer-specific reporting

Client Benefits

Now the client has a relatively easy-to-use intranet that organizes complex information and dramatically shortens reporting cycles. Business users can now spend more time analyzing and less time organizing information from their hedge funds. The Data Agent solution provided the client with the following benefits:

• Automatic uploading and verification of fund and market data, improving accuracy and timeliness of the data
• Lower costs of ownership due to elimination of manual data entry
• Ability to apply existing financial models to Data Analytics’ Cube technology, allowing the client to reuse existing IP
• More timely access to data for custom visualizations using the multidimensional data pivot features of Data Analytics
• More up-to-date reporting capabilities and the ability to create custom report packages for customers