NEW YORK, June 15, 2004 – Colonial Fund, LLC, a New York-based hedge fund, wanted to upgrade its risk management systems. While the company understood the need to increase risk monitoring, it sought to do so in the most cost efficient manner.
After assessing different products available in the marketplace, Colonial Fund decided to deploy Imagine Software's derivatives.com. This is an ASP version of Imagine's own high-end risk management system.
"We knew we needed a product that would allow us to isolate risk and to present our exposure to clients in a transparent manner," said Alan Brody, Colonial’s Risk Manager. "It is also important that we have a system that can amalgamate trading inputs from multiple prime brokers."
Before Colonial purchased the system, managers gave it a thorough tryout that lasted several months. They loaded a mock long/short portfolio into the system and then watched how it performed over several months. "We wanted to see how it kept track of positions, monitored risk exposure and measured return-on-total-capital vs. return-on-invested capital," said Brody. Portfolio manager Kevin Cope also liked the way the system gave him the ability to view portfolios from multiple perspectives and to get cumulative real-time P&L, and month to date P&L, both unrealized and realized.
Cope also found the ASP structure a big plus. "We are able to monitor and adjust risk via the internet from any remote location," said Cope, who is based in California. The system is also prime broker agnostic. Once Cope customized the reports to his liking, he was able to use them in preparing marketing material for potential investors in a new market neutral fund offering being launched by Colonial later this year.
Steven Harrison, President and co-founder of Imagine Software, added: "We are very pleased to be associated with Colonial. Many of our sell-side clients who left to open up their own firms kept telling us there was a real need for an affordable trading and risk management solution that didn’t require a large support staff. By using the Internet to deliver our software, we can offer the same sophisticated analytics to a much wider portion of the financial community. People on the buy-side want a total packaged trading system solution that includes data, services and straight through processing. That’s what derivatives.com offers."