Hedge Fund Operations & Technology2011 Benchmark Study

AgendaSurvey Methodology

Respondent Profile– AUM– Offices/Employees– Investment Strategy– Prime Brokers

Data Findings– Front Office – Middle & Back Office

What does this all mean?

Survey Methodology223 Total Respondents

Alternative Investment Firms– Hedge Funds– Private Equity– Fund of Funds– Venture Capital

Surveys completed in 2nd half of 2010

Respondent Profile

Respondent Profile

Of firms who indicated they used a multi-strategy approach, 56% said they used Equity (L/S) as one of their strategies.

The second most common strategy used was Fixed Income (22%), followed by Credit and Private Equity (17%), Distressed Securities and Quant (12%), and Arbitrage and Emerging Markets (7%).

Top Four Secondary Prime Brokers:

1. Goldman Sachs2. Morgan Stanley3. JP Morgan4. Credit Suisse

Data Findings

Front Office

OMS

Market Data Vendors

Market Analytics

Research & Document Management

Front Office: Order Management System

Others:• BTIG OMS• Calypso• Charles River• DMAXX• Fidelity• First Derivatives• Fiserve• Flextrader• InstaQuote• Linedata• McGregor• Merlin OMS• Neovest• Night Direct• Portware• RediPlus• Proprietary

System

ConvergEx’s Eze OMS, Bloomberg OMS and Advent’s Moxy most commonly used

Front Office: Market Data Vendors

Others:• Factset• NYSE• Fund Data• Wombat

Respondents were allowed to select multiple vendors.– 30% of firms with Bloomberg also had Thomson Reuters

Front Office: Market Analytics

43% of respondents used multiple analytics tools– Top combinations were Bloomberg & Capital IQ, Bloomberg & Thomson

Reuters

Front Office: Market Analytics

Others:• The Street• Markets.com• BarraOne• JP Morgan• Edgar Online• Hub.com • Partners

Research• Debtwire• Morningstar

Bloomberg, Capital IQ, Thomson Reuters and Factset are most commonly used

Front Office: Research & Doc Management

Code Red and Tamale RMS products emerging as ‘leaders’ and increasingly replacing in-house solutions

Middle & Back Office

Portfolio Accounting

Risk Management

Investor Relationship Management

Email Archiving

Instant Messaging

Mobile Devices

Middle & Back Office: Portfolio Accounting

Others:• Calypso• E-file Cabinet• Fortis• FundManager• Gravity

Financial• Ledgex• Northern Trust• Proprietary/In-

House• Tradar

Middle & Back Office: Risk Management

Others:• Barra One• Bloomberg• Factset • Fund Manager• GlobeOp• MATLAB• Merlin• Murex• SunGard

Note: Some respondents provided multiple answers.

Middle & Back Office: Investor Relationship Management

Others:• Code Red• Fund Manager• Fundrunner• Ledgex• Microsoft• PerTrac• Sage SalesLogix• Satuit• The Next Round

(TNR)

Middle & Back Office: Email Archiving

Dodd-Frank requires archiving, driving increased adoption– Global Relay most commonly used vendor

Others:• Advisor Mail• FrontBridge• i365• Intradyn• Message One• Seccas• Smarsh

Middle & Back Office: Instant Messaging

Of the firms who indicated they used Instant Messaging, 25% listed more than 1 vendor

Others:• Google Chat• IMTrader• Pigeon• Pod• Reuters Messaging• Trillian• Windows Live

Messenger

Middle & Back Office: Mobile Technology

Of the firms that listed the use of mobile devices, 8% indicated they used more than 1 provider

Final Thoughts

Dodd-Frank Implications

Increased Focus on Investor Transparency

Continued Diversity in the Marketplace

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