Spreading The Wealth In Risk Management

Jan 18 2007 | 10:20am ET

Rising fees notwithstanding, many smaller hedge funds rely on an old standard for their risk management systems, Microsoft Excel, according to a new study from buy side research firm Carbon360.

“Funds under $4 billion rely on Excel or prime broker-delivered risk solutions,” said Brian Shapiro, president of New York-based research and consulting firm Carbon360. “The larger risk systems, which can cost up to $4 million to buy and install are completely unaffordable for the smaller funds.”

Instead, they’ve turned to the ubiquitous, more affordable spreadsheet (retail price: $229). According to the new study, fully 29% of hedge fund risk management is still based in Excel leaving a lot of room for growth in sales of risk systems.

“A majority of interviewed firms advised that their primary risk systems have all been built in-house,” Shapiro said. “This leaves open the opportunity for many of the vendors mentioned in this report to see strong sales in the years ahead.”

Carbon360 expects spending on risk and portfolio management systems will rise 17.36% this year to $5.25 billion and to $9.68 billion by 2011, driven by demand from alternative firm clients.

“We do see a trend in the uptick in demand for risk systems driven by institutional investors seeking greater transparency and risk controls,” Shapiro said.


In Depth

Steinbrugge: Top 10 Hedge Fund Industry Trends for 2017

Jan 3 2017 | 9:03pm ET

Each year, Agecroft Partners' Don Steinbrugge predicts the top hedge fund industry...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

DarcMatter: The Top Trends in Alternative Investments for 2017

Jan 13 2017 | 8:22pm ET

The $7 trillion alternative investments industry is poised for continued growth...

 

From the current issue of

The U.S. Commodity Futures Trading Commission (CFTC) ordered The Goldman Sachs Group Inc., and Goldman, Sachs & Co. to pay a $120 million penalty for attempted manipulation and false reporting of ISDAFIX Benchmark Rates, a global benchmark for interest rate products.