Helping Hedge Funds Achieve Smart Scale

HEDGEWEEK | MAY 2015

As the asset management industry continues to grow, driving investors’ appetite for more transparency, reporting and risk controls, the biggest challenge hedge fund managers face is how to create scale. 

Founder and CEO Jayesh Punater established Gravitas Technology Services in 1996. Gravitas provides a technology platform to the asset management industry with a particular focus on supporting the front- and middle-office for hedge funds. The solution is simple: Gravitas partners with managers to create smarter scalability for their funds. Working in conjunction with fund administrators, it enables hedge funds to leverage complete front- to back-office support.

“As a result of these increased demands, there is a need for what we call ‘smart scale’ in terms of the way managers operate today,” says Punater. “This is especially true when one considers data management. With the way hedge funds operate – mobile communications, cloud computing, etc – there really is no downtime for managers. Managers deal with a constant flow of information – the speed of which has become critical.”

“Consequently, there’s a huge focus not just on efficiency but on having immediate access to data anytime, anywhere. The focus on data management is growing and will continue to grow exponentially – not only as a defensive measure to manage day-to-day operating needs and to meet investor and regulatory reporting needs, but also to gain competitive advantage,” says Punater. 

To overcome issues of scale, data management and speed, managers might choose to hire people and build the technology internally. With so many moving parts, the problem is that managers have to build a separate interface to integrate different systems, which becomes quite an ordeal to undertake and manage.

“How do you get each vendor to meet the speed and agility required to optimize your business model? It doesn’t work using the multi-system approach. However, while managers are comfortable outsourcing the back office functions to their administrator, they have been historically less comfortable outsourcing the front- and middle-office functions because they don’t want to lose control or customization. This is now changing,” notes Punater. 

In 2012, Gravitas acquired a front- and middle-office technology platform from TPG-Axon Capital Management, a New York-based global multi-strategy manager. Since then, Gravitas has been enhancing the platform to provide a fully integrated solution, giving managers the confidence to outsource their front- and middle-office functions by adding pre-trade compliance, support for all credit product types and an integrated data model.

Central to Gravitas’ philosophy is that managers need a single view of their data using one integrated platform, as this empowers managers to make faster, smarter decisions. 

“To provide one integrated view of a firm using a system that connects directly to the fund administrator to support portfolio management, risk management, research, order management, and middle-office is a powerful proposition. Moreover, the client receives services that are fully customizable and controllable as if the Gravitas staff were part of their own team,” confirms Punater.

Reporting and transparency are a few of the main issues that managers are grappling with today. Take reconciliation, for example: identifying trade breaks and resolving them quickly requires robust data.

“Gravitas first solves the data problem and then adds a layer of service on top to improve efficiencies in risk reporting, reconciliation, etc. With increased demands from clients in respect to these two areas, smarter scale is becoming even more critical as more funds enter the space,” concludes Punater.