For hedge fund managers currently outsourcing or buying their core tech, a key question presents itself: are we using the best vendors and/or products? Depending on factors from the provider’s pricing and features, through to the manager’s investment strategy and location, the range of options available, or lack thereof, can be startling. This second section examines the key providers, helping to understand why managers outsource and buy – and why some might be considering a change.
And so, to the direction of travel. Through fresh data and a series of Sankey charts, section four ties this report together, showing our earlier findings in a new light and mapping out the ‘journey’ through technology of various types of hedge fund manager. Here, we not only identify the types of approach that were, are and will be popular in the hedge fund industry at large, but the specific types of journey undertaken by tenured managers and the lessons they have learned.
If the mix of businesses in the hedge fund industry is eclectic, so too is the way its constituents approach technology. To help establish a starting point for our journey, the Insights team divided the industry into three: core tech primarily developed internally, purchased off-the-shelf, or provided by an outsourced/hosted solutions. The first section of this report explores the top-level results, looking at how different managers, with different needs, are using technology and seeking trends, by business size and style, within each category.
To talk about technology is to talk about the future. Section three embraces this mantra, exploring tech experimentation, recruitment and budgets, and the effect they have on a hedge fund manager’s approach to core business technology. Here, we provide insight into the managers who have created a scalable and sustainable infrastructure, what those yet to act have planned, and what this all means for the hedge fund industry at large.
Standing still is just as bad as moving backwards, and so training and study are important to the progress of any individual or firm. The tech industry is an advertisement for the constant need for improvement, but who to train and how to do it are less obvious. Which platforms provide the best online learning experience for hedge fund employees? And is there room for developing graduates’ careers within the hedge fund industry? These questions – and more – are explored in this final section.
To read the headlines in the mainstream financial press, one could be forgiven for thinking hedge fund managers across the globe were battling it out with Google, Apple and Amazon for the best and brightest in tech talent. While this may be an exaggeration, what is true is that identifying and securing talented technologists is as important – and challenging – as ever. A significant proportion of managers are hiring or considering doing so, but which sources and channels do they use and which skills does their ideal candidate possess? Section two tackles these questions.
Crunch time – money and benefits. In terms of recruitment, this is the subject that attracts the most media attention and the most manager interest, but is also where the need for information is greatest. While every CTO will have an idea of their ideal recruit, attracting the right candidates is another matter. Section three looks at the challenges managers face when hiring tech talent, the steps they take to overcome them and, most intriguingly, the financial packages such roles can command.
Ten years ago, is was relatively rare for a hedge fund firm to have a dedicated CTO, let alone a fully fledged tech team. But as technology takes on an ever greater role within the industry, more and more managers are considering whether they need to employ tech staff, how many, and how to structure their team. The first section of this report explores these topics, creating a benchmark for managers considering how best to carry forward their tech ambitions and capping this off with a look at ways of mitigating the concentration of systems knowledge in a lone individual.
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