People In The Trade: Stuart Calder
Published on March 5, 2008.
There has been much talk in recent weeks of convergence between hedge funds and long-only buy-side managers. Yet the vast majority of the thousands of hedge funds in the marketplace do not deploy order management systems (OMSs) or have comparable regulatory and compliance concerns to more traditional long-only managers.
theTRADEnews met today with Stuart Calder, head of product strategy and management, Linedata Services, a provider of solutions to both hedge funds and long-only managers, at the TSAM event held in London, to ask how likely it is that, and how long it might take for, hedge funds to fully embrace more traditional long-only strategies.
Hedge funds looking to take on ‘long-only money’ face a number of operational challenges derived from taking on hundreds, or potentially thousands, of new portfolios. “Contrary to institutional money managers, an alternative manager typically does not segregate the workflow of the trading process,” commented Calder. “Analysis, modeling, the decision to trade and the execution of the trade are often rolled into one,” he added.
And any hedge fund entering the institutional space has to deploy a compliance platform, preferably integrated into an OMS, to meet the more rigorous compliance obligations of institutions firms, noted Calder. Yet smaller hedge funds regard OMS as “overkill and unnecessary for the investment process,” he remarked.
Despite these challenges, some larger hedge funds, including GLP Partners, Odey, Landsdowne Partners and Caxton Associates, have moved into the long-only space, taking on large amounts of institutional money, according to Calder. In 2007, Fortress Investment Group became the first publicly traded hedge fund in the US, following the path of Man Group, RAB Capital and BlueBay Asset Management listing in Europe.
But how long will it take for more hedge funds to overcome the myriad challenges of dealing with institutional money? Calder admitted it will be several years before “talk of hedge funds entering the long- only space becomes reality.”
