Launching a hedge fund means thinking through everything from securing a seeder to defining and validating a portfolio strategy. Setting up operations and choosing an investment management platform does not need to become another source of anxious complexity.
In fact, when made correctly, operational decisions can dissolve that complexity, for launch and over the long haul.
Albany Capital, a global macro fund based out of Sydney, was ready to launch in early 2020 after carrying out a lengthy due diligence process. The investment team had validated its strategy by generating strong returns in a trial portfolio.
With more than 35 years of investment experience, Alastair Sloan, Albany’s Chief Investment Officer, had high delivery standards for portfolio, order, and risk management. He was an industry veteran who launched multiple previous hedge funds and led the long-term asset allocation and short-term technical asset allocation decisions Australian superannuation fund, Sunsuper’s $50bn fund. Together, Alastair and David Gray, Albany’s Chief Operating Officer, initially intended to use multiple software providers and a “best of breed” approach across their front, middle and back office. Given their extensive industry experience, they had high delivery standards for portfolio, order, and risk management.
When you start putting all these providers together, that's when the difficulty comes.”
Unfortunately, COVID-19 delayed their early 2020 launch. Unable to commence operations, they began to rethink both their investment strategy and operating model. They realized that the ability to trade different asset classes, including derivatives, would need to be as automated and seamless as possible, and that their initial best-of-breed system would incur a higher total cost of ownership (TCO) and be operationally challenging to maintain.
“When you start putting multiple systems together, that’s when the difficulty comes,” explained Alastair. Adding asset classes such as private equity and real estate provides a clear example of where workarounds do not scale well. “In the past, I used providers that didn’t support specific asset classes. It meant I had to create a private security that would not provide any risk information. When we started talking to Enfusion, we realized that was not the case as it supports all the products I was looking to trade.”
Enfusion understood what we needed and provided an all-in-one platform.”
One of Albany’s investors suggested they take a deeper look at Enfusion to simplify their approach to technology and operations. Enfusion provided a fresh perspective. Rather than creating a complex hive of separate systems for each core area of the front-, middle-, and back-office, Albany decided to consolidate on Enfusion’s front-to-back platform. Enfusion’s multi-asset coverage and single source of truth across PMS, OEMS, and Accounting was crucial for achieving straight-through processing and reducing the overall TCO, thereby minimizing risk. With Enfusion as their foundation, they launched in May 2021.
Enfusion understood what we needed and provided an all-in-one platform,” said Alastair. “When you are launching, you can’t compromise on your technology. Otherwise, in the long run, you will regret it.
When you are spending time and effort on workarounds and checking data across the PMS, OEMS, and risk system, that cost will be reflected in your overall performance.”
Why did Albany choose Enfusion? Several factors went into Albany’s decision. One of their top priorities is to prevent operational and institutional risk from lowering investor returns. Enfusion’s single source of truth also made a big impact on their final decision. “When you are spending time and effort on workarounds and checking data across the PMS, OEMS, and a risk system, that cost will be reflected in your overall performance,” said Alastair. “I have been involved in risk management since the 1980’s, so when we evaluated different providers, we looked not only at the mathematics of the risk systems, but also at how much data manipulation would be required,” said Alastair.
On the trading side, Albany needed peace of mind when trading U.S. markets from Australia. Other U.S.-based providers had spotty service, with limited support during the business day in Australia, sometimes requiring manual reviews to ensure system data was accurate, or inducing time delays from remediating data discrepancies. “Prior to selecting Enfusion, I ran multiple shadow P&Ls, and I never found errors in the P&L nor the execution… That sort of comfort is great, especially when you work late at night,” said Alastair.
It’s extremely important to us to look to the future from the beginning, and that includes our technology partner.”
Enfusion’s approach to client support also allowed Albany to save on headcount costs. “With Enfusion, their client-first approach was comforting to us,” said Alastair. Enfusion’s implementation team went above and beyond, providing all the necessary expertise needed to perform the implementation.
“Enfusion is a silent partner between Albany Capital and some of my clients. I wanted to know that everything worked correctly and that I was using the system efficiently, so that I had a reliable source of data to share without worrying about it,” continued Alastair.
Albany Capital’s vision goes beyond just moving into new asset classes or growing its customer base. As part of their launch, they recently hired a trader in London to increase their trading hours coverage. “We were after a system that was flexible, accessible, and scalable—and where we don’t incur costs every time we take advantage of new features. It’s extremely important to us to look to the future from the beginning, and that includes the selection of our technology partner.”
“Part of choosing Enfusion was because we knew they were excited to grow with us, and they showed commitment from the very beginning,” Alastair concluded.
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