Institutional Investor's Alpha Magazine - November 2007 - (Page 56)

Alpha Awards: Top Technology Providers exposure. The ﬁrm vaults to the lead position among Risk Management providers this year, from fourth place in 2006. Imagine Software holds tight to No. 2, and formerly topranked RiskMetrics Group falls to No. 3. Richard credits Morgan Stanley’s high standing among hedge funds to the client services behind its RMS — the consultation and advice from the ﬁrm’s experts that is included in the package. And hedge funds seem to agree. Morgan Stanley tops the voting for Support & Client Service and Technology & Architecture, although it comes in third for Software Functionality. “We are prime brokers,”says Richard. “Our business is ﬁnancing, not selling technology.” He adds that Morgan Stanley has no qualms about recommending another vendor to a prime brokerage client shopping for a risk solution. “I don’t look at us as competing against risk vendors,” he says. Even so, the ﬁrm manages to displace some of its competitors. Second-place Imagine views hedge funds as its target market, counting more than 120 of them as clients. Since many of the managers it deals with have come out of large institutional investors, Imagine focuses on providing solutions across the board — from the smallest start-up ﬁrms to multibillion-dollar funds. One third of Imagine’s 130-member workforce is devoted to product development — an emphasis that helps the firm land the top ranking for Software Functionality in Risk Management. RiskMetrics, which was spun off from JPMorgan Chase & Co. in 1998, has long been the standard in RMS and a favorite among hedge funds. The ﬁrm currently boasts more than 300 hedge fund clients, but fund managers say its basic architecture is in need of an update. Voters give RiskMetrics the lowest marks of the top three for Technology & Architecture, even as the ﬁrm ranks second for Software Functionality and Support & Client Service. TOP TECHNOLOGY FIRMS BY ASPECT OF SERVICE As part of the Alpha Awards™ survey, we asked hedge funds to rate their technology providers on various aspects of service. Here are the top-rated firms in each of those categories. SOFTWARE FUNCTIONALITY Rank Execution Management 1 FutureTrade 2 Bloomberg 3 Banc of America Securities Rank Investor Relations Management 1 Backstop Solutions Group 2 Sage Software 3 PerTrac Financial Solutions Rank Order Management 1 Eze Castle Software 1 2 Charles River Development 3 Advent Software Rank Portfolio Accounting 1 Goldman, Sachs & Co. 2 Tradar 3 SunGard Data Systems Rank Risk Management 1 Imagine Software 2 RiskMetrics Group 3 Morgan Stanley 1 SUPPORT & CLIENT SERVICE Rank Execution Management 1 Banc of America Securities 2 FutureTrade 3 Neovest Rank Investor Relations Management 1 Backstop Solutions Group 2 PerTrac Financial Solutions 3 Sage Software Rank Order Management 1 Eze Castle Software 1 2 Advent Software 3 Investment Technology Goup Rank Portfolio Accounting 1 Goldman, Sachs & Co. 2 Tradar 3 Advent Software Rank Risk Management 1 Morgan Stanley 2 RiskMetrics Group 3 Imagine Software TECHNOLOGY & ARCHITECTURE Rank Execution Management 1 Banc of America Securities 2 FutureTrade 3 Neovest Rank Investor Relations Management 1 Backstop Solutions Group 2 Sage Software 3 Netage Solutions Rank Order Management 1 Eze Castle Software 1 2 Charles River Development 3 Advent Software Rank Portfolio Accounting 1 Goldman, Sachs & Co. 2 SunGard Data Systems 3 Tradar Rank Risk Management 1 Morgan Stanley 2 Imagine Software 3 RiskMetrics Group Part of BNY ConvergEx Group. HOW WE COMPILED THE RANKINGS W e compiled our 2007 Alpha Awards™ ranking of the top hedge fund technology service providers based on voting in the summer and early fall. Alpha polled nearly 300 hedge fund management ﬁrms, which manage more than $600 billion in assets. Polling included ﬁrms in the 2007 Hedge Fund 100, our ranking of the world’s 100 biggest single-manager hedge fund ﬁrms. We also tapped directories and industry data sources and contacted hedge fund management ﬁrms from client lists supplied by service providers. We met with technology ﬁrms in the early spring to discuss changes within their businesses. Hedge fund managers were asked to rate the quality of the software they use and the service they received for the 12 months ended March 31, 2007, for Execution Management, Investor Relations Management, Order Management, Portfolio Accounting and Risk Management. For each type of software provider, service quality was broken down into broad attributes, which included a series of specific points of service. Respondents — whose identities are kept anonymous to ensure their continued cooperation — also rated the importance of each service attribute, the results of which were then used to help calculate the overall winner in each major category, rewarding ﬁrms that do well in the tasks hedge funds prize most. To rank, service providers had to meet a minimum vote count. The survey was conducted by Associate Editor Timothy Roberts under the guidance of Director of Research Sathya Rajavelu and Senior Editor Jane B. Kenney, with Researcher Katie Gilbert. 56 • INSTITUTIONAL INVESTOR’S ALPHA • NOVEMBER 2007

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - November 2007

Institutional Investor's Alpha Magazine - November 2007 Contents Letter from the Editor Longs & Shorts Pension Corner: Patriot State The Good Guys: College Connection Interview: Currency of Change Cover Story: Comeback Kid Strategies: Masters of Art Research Center: Alpha Awards: Top Technology Providers Top Analysts Alpha Bytes: Critical Choice Unhedged: Commentary: Banking on a Bubble

Institutional Investor's Alpha Magazine - November 2007

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