DataArt, a custom software development firm that builds advanced solutions for select industries, has completed a sophisticated risk control system for Informed Portfolio Management (IPM), a leading European hedge fund.
IPM currently manages assets exceeding eight billion of some of the world's most sophisticated pension funds, sovereign funds and other institutional clients in GTAA, currency management, equity management commodity and multi strategies, and was voted the Global Pensions Hedge Fund of the Year 2011.
IPM engaged DataArt to finalize the development of a risk management system designed to calculate risk and provide portfolio exposure metrics for several strategies and asset classes, including currencies, commodities and equities.
DataArt developed a Web-based application which calculates various portfolio risk measures such as VaR (value at risk) metrics and exposure for the different types of accounts, managed by IPM. Based on modern methodologies, the risk management system does pre-trade risk modeling and approves recommended trades for each of the client's accounts. To ensure regulatory and contractual compliance, the system can run back-tests on the current portfolios using an extensive array of historical market data and calculate the tracking error for each portfolio. This functionality is crucial for the hedge fund operation, as per-account risk budgeting is a strict requirement by IPM's larger institutional clients.
"In DataArt we found a trusted technology partner to support our operations," said Anders Lindell, Executive Vice President of IPM. "DataArt's proven expertise with building front to middle integrated solutions and, specifically, model calculations was crucial for building a robust risk mitigation system we had envisioned in a timely manner."
DataArt, which works with leading companies in the capital markets industry to create mission-critical systems and has a dozen leading hedge funds in its client roster, delivered the advanced risk management tool in full compliance with project requirements. The application is currently used by IPM to manage assets on behalf of some of the largest European pension funds, majoor asset management firms, and banking institutions.
"We managed to optimize time to market for IPM thanks to efficient knowledge transfer and onsite collaboration with the business stakeholders," said Alexander Makeyenkov, SVP of Capital Markets at DataArt. "In the post-crisis landscape we see strong recovery signals in the asset management space, and the new regulations only add more requirements to software initiatives that have been frozen for the last few years. The time-cost saving attribute of service is crucial today, and that's why DataArt has an attractive proposition for buy-side clients: we offer expertise in serving financial clients with a hybrid of onsite/near-shore delivery model."
IPM extended its engagement with DataArt into 2011 to customize some of their current risk management solutions, including integration of the existing market data systems with an additional third-party risk management system.