Small differences are amplified with hedge fund firms, and gaining even the slightest edge can make a tremendous difference when competing with other firms. Because of this, hedge fund technology has always played a critical role in the field. Here are a few of the ways technology has affected hedge funds and their management.
Calculators
Calculators changed how hedge funds were managed. Instead of relying on people whose role it was to compile mathematical information, hedge fund firms could instead use fast, accurate and reliable calculators. Early calculators were large, and many have now been supplanted by computers. However, any room used by a hedge fund firm will likely have a handheld calculator within reach.
Early Computers
Early computers were even faster than calculators, but they were also able to perform calculations in an automated manner. Instead of having to input information by hand, those who used these computers could have information calculated automatically. These early computers were thousands of times slower than modern computers, but their capabilities revolutionized the field.
Network-Based Computing
Networking lines run to all major business centers, and they deliver information at unbelievable rates of speed. Instead of having to input or scan information, firms could instead have it delivered automatically. The networking lines used in the past have long been replaced, but the principles have remained the same. Quick decisions are essential when managing hedge funds, and the pioneering work done decades ago still resonated today.
Soft Skill Technology
Much of the emphasis on hedge fund technology focuses on how information is collected, compiled and distributed. However, the so-called soft areas of hedge fund management have been affected by technology as well. Communication matters in handling hedge funds, and modern technology has enabled better communication. In addition, the Internet has made making connections and learning more about potential investment sources far easier than ever before. These technologies have had a major impact on the field.
Hedge fund technology changes quickly, and we are in the middle of a move to cloud-based solutions. By understanding how technology has changed hedge funds, those who work with them can develop better perspective and an ability to understand what future technological advances will mean for the field.
