state of the hedge fund industry in 2011

2011: State of the Hedge Fund Industry

Hedge Fund Market Impressions in 2011

Through the first five months of 2011 (Jan-May), the industry brought in $75b – the heaviest inflow since 2007

Despite increased inflows, performance has been lackluster – returns were at just 2.1% through May

The average hedge fund lost 1.22% in June 2011

Regulations continue to play a big role and will affect operational and technology decisions for the remainder of the year

Cloud services is the biggest trend in hedge fund technology

What challenges are funds facing today?

Performance is always a key challenge for hedge funds and investment firms

Increased competition is fueling challenges around asset-raising for firms of all sizes and strategies

Uncertainty about hedge fund regulation (e.g. Dodd-Frank) remains

2011 is continuing the trend from last year in terms of increasing numbers of start-up hedge funds entering the space

Firms are often smaller in size than in previous years

Many are using managed account structures

Long/short equity continues to be the most popular strategy among start-up funds

What are we seeing from new start-ups?

Have a plan – especially around your technology infrastructure and risk management practices

Create a technology roadmap that takes your firm’s future growth into account

Put processes in place to function as if you were a large, enterprise organization (even if you are not!)

At the end of the day, your success will be measured by your performance

Advice for smaller funds entering the market?

Are investor requirements changing?When it comes to technology, investors want to see:– Disaster Recovery System– Business Continuity Plan

Role of the technology provider is changing accordingly– No longer just keeping the lights on– Drawings of systems and processes are not sufficient– Service providers being pulled into due diligence meetings

How is the cloud changing the hedge fund space?

The technology otherwise known as the “cloud” has been in place for years– CRM and OMS tools have been utilizing the cloud for many years

Private cloud services are now being embraced by the hedge fund community and its investors

It is important to understand the difference between Public and Private clouds – as they are two entities entirely

Funds should educate themselves and their investors about the cloud, particularly cloud security

Hedge funds will continue to adopt cloud solutions, particularly as a result of their increased flexibility and scalability– Easy to increase storage, networking, bandwidth, etc.

Large firms are even building their own private clouds

In 3-5 years, it would not be out of the question for 100% of hedge funds to be utilizing the cloud in some way

Is the cloud a passing trend or here to stay?

ContributorsThe material put forth in this presentation is attributed to:

Tiger GlobalManagement

Eze Castle Integration OverviewFounded 1995

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