Hallstatt Advisors – A New Breed of Hedge Fund
Based in New York City, Hallstatt Advisors is redefining what running a successful hedge fund operation looks like.
Founded in August 2020, this equity-only fund focuses on significant paradigm changes in the industrial economy, including supply chain restructuring, electrification, and decarbonization. Since its founding, the fund has grown to over $60M AUM, yet its operational costs have remained low.
What makes Hallstatt’s operation so effective?
Jonathan Goldberg, Chief Investment Officer at Hallstatt Advisors, says the answer is outsourcing. By outsourcing critical functions of his operation, Goldberg minimizes costs associated with overhead and headcount and can better respond to a rapidly changing market.
So, when it came time to choose an investment technology provider, Goldberg knew he needed a solution that would meet the demands of his firm without requiring investments in infrastructure or internal resources.
The modern, cloud-native architecture of Eze Eclipse provides the functionality and flexibility the firm needed to get its operation up and running, while SS&C Eze Client Service builds on the value of the technology, providing Hallstatt with the technical support they need to grow their fund while remaining agile and minimizing costs.
Building the Future on a Strong Technical Foundation
For Goldberg, selecting Eze Eclipse was a natural evolution of his investment technology journey, having used Eze technology for 17 years at his previous firm.
"I grew up in the industry using Eze Investment Suite," says Goldberg. "As a loyal Eze user, I was very familiar with the technology's features and functionality. I wanted to bring the continuity of that experience to benefit this new firm."
In addition to functionality, ease of use and streamlined implementation were critical requirements.
“Eze Eclipse gave us the best of both worlds – robust functionality combined with the ease of use we were looking for,” says Goldberg.
He highlights the technology’s trading capabilities as an example. “I trade through an outsourced trader, and Eclipse gives me one repository for putting all the trades,” says Goldberg. “I can also add comments as needed, such as the percentage of the volume, price, and with whom I want them to trade. It also helps me allocate commissions.”
Moreover, he feels that Eclipse technology not only meets his needs today but will grow alongside his firm.
“With Eclipse, you can turn on the system and meet your basic needs day-to-day without a major headache. As your needs change, you do not have to reinvent the wheel; the technology can expand with you,” says Goldberg.
Quality Service Proves Critical to Outsourcing Success
While outsourcing investment technology has many benefits, investment managers cannot harness these benefits without quality vendor support and service.
By responding quickly and minimizing the need for in-house support, the Client Service team at SS&C Eze contributes to Hallstatt's ability to maintain a streamlined investment technology infrastructure. Goldberg says that the service and support he has received from his Client Service team has been very good – from the onboarding experience to how the team responds to questions.
He goes on to say that while the “Walk Me Through” tutorials provided by Eze are beneficial, sometimes questions come up in real-time, and that's when the Client Service team is particularly helpful. "A lot of Eclipse functionality is discovered over time as you use more features. But whenever a question came up, the service team was always available to provide the answer, usually within the hour."
For example, after three months of using Eclipse, Goldberg had an investor meeting and wanted to report on the fund's performance.
"I wanted to download our biggest winners from the past year. I had learned how to do that once, but because I had yet to use the feature, I needed help. So, I reached out to the team, and they provided a response that took me step-by-step through how to do it."
In addition, the service team has helped Goldberg navigate new features, like time series reporting. "Working with the service team, I could better understand this feature and learn how to use it to my advantage," says Goldberg.
Goldberg has also turned to the service team to execute projects, like setting parameters for his fund utilizing our robust compliance module.
"We have portfolio parameters and exposure parameters for the fund. I asked the service team to help set those parameters," says Goldberg. "They put in 'fat finger' rules that guard against accidental exposure above or below where it needs to be. Now, the system will alert me, which is very important."
This embedded compliance module, which does not require back-end coding and is fully accessible to end users, allows clients to configure compliance rules that suit their needs.
In addition, Goldberg says the service team helped the firm set up rules to monitor the size of its funds’ positions. “I sent them the list of portfolio rules, and Eze Eclipse tracks positions by the fund AUM. Now, if a position is too big, the system gives me a heads-up. So that was very helpful.”
And while Hallstatt has never had a problem with downtime or been frozen out of the system, Goldberg says that the prompt response he gets from his service team gives him the confidence of knowing that, should an actual technical emergency happen, he can count on their high level of support.
The Outsourcing Advantage: The Future of Hedge Fund Investment Operations
Goldberg believes that outsourcing is the future for firms like his.
"Our industry has changed a lot in the last two to three years," says Goldberg. "In this post-COVID world, outsourced services are the way to go. Firms who outsource will have an advantage over those who don't."
He believes that service is a critical part of what makes outsourcing successful. Goldberg says there are key advantages to working with people who live and breathe the technology and are up to date not just on what the technology can do but how it can help navigate the challenges and opportunities happening in the industry.
"I could hire someone with a great pedigree, but it may have been five years since they implemented a solution," says Goldberg. "The rapid pace of change in our industry means you want to talk to a person who, day in and day out, is working with customers and knows the technology and the industry."
Goldberg also notes a paradox around outsourcing in the investment industry.
"We talk to corporations to determine whether to invest in their companies. They will tell us how they use cloud software, outsourced service providers, and freelancers all day long. We write that down and make our investment decisions."
He continues, "But then we go back to an industry that has often required everything to be in-house – ‘your in-house CFO, your in-house trader, and so on.’ Strangely, those in our industry are not heeding the lessons we hear daily from the companies we choose to invest in."
Research supports his thinking. Lower headcounts and the range of outsourcing solutions available today enable hedge fund managers to get their funds up and running more efficiently, reduce costs, and reach their breakeven point more quickly.
The Attention and Expertise Your Firm Deserves
As investment firms run leaner, more efficient operations, they need a technology vendor their firm can rely on, one that can help them adapt – and grow – along with the inevitable changes in today’s markets.
At SS&C Eze, we understand the demanding nature of your work and the urgency of your business needs. By providing a personalized experience for each project and client, we become more than a vendor; we are a trusted partner at each step in your firm’s growth.