Hedge Funds are now dictated by Technology

Hedge Funds are now dictated by Technology

Capital Markets CIO Outlook | Friday, November 30, 2018

Financial market generates a humungous amount of data on a daily basis. This has augmented the information base of stock market about many industry verticals that were previously unknown. The data deluge in conjunction with the rise of cloud computing has inspired hedge fund organizations to devise strategies that can boost their return on investment. Most large hedge funds already have powerful computing infrastructure in place to adapt to the technology evolution. From high-frequency trading to implementing machine learning or data-science and other quantitative methods, such corporations have it all. Although machine and data can take care of all the processing and analysis requirements, the onus of finding the right technology is on humans.

Technology can offer a variety of options to hedge funds to fabricate methods that benefit investors. According to a report, a few years ago, owing to the proliferation of high trade computing, many organizations built networks of microwave towers and even reserved space on trans-Atlantic fiber optic cables to eliminate competition by a fraction of seconds. In the last couple of years, hedge funds have driven the wheel of innovation and have incorporated machine learning in their systems, and hand over key decisions to data scientists. This will go a long way in building a different breed of hedge funds that is completely independent of human interventions and is controlled by codes and machines.

With such developments, many organizations have begun to build investment algorithms that eliminate the need for manual intervention in hedge fund ecosystem. If this continues, most organizations in the trade sector are bound to embark on a financial era wherein they have to entrust their money to machines instead of a managers.

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