What is it?
Hedging is a way to reduce risks, ring-fencing from undesirable market trends in the future. The main purpose of hedge fund software service, in contrast, is to maximize profits at a given risk level by investors or minimize risk at a certain profitability level. Is there no contradiction here? No. The reverse side of hedging is super profitability for portfolio investors and financial speculators. Today, more than 12,000 hedge funds with total assets of over $ 2 trillion are registered in the world, and the profitability of the best has exceeded 100% per annum.
Hedge fund software mobile app: why is it for your business?
Today, the activities of many state organizations and private companies have become so complex that it is no longer possible to manage with standard programs. That is why software development customized is becoming increasingly common. And this is not surprising, because the programs development customized is a good opportunity for a client to get exactly what his business needs at the moment. Many companies have already appreciated all the advantages that software development customized provides, because as a result, customers receive a quality product that can significantly reduce the time and labor costs for document management, reporting and other paperwork. Therefore, modern managers are interested in software development.
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The essence of hedge fund
A hedge fund is a private investments fund that:
- Is managed by professionals in the interests of investors.
- Acts on an aggressive investment strategy.
- Is not limited in the choice of investment methods, it actively uses derivative hedging instruments (derivatives) and their combinations.
- Purpose: focuses on minimizing risk at a fixed level of return by investors or maximizing profits at a given level of risk.
Hedge fund software solutions development: key principles of work:
When developing hedge fund software, we consider the following principles of the system:
- The principle of protecting investor interests.
- The principle of equity participation or trust management. The latter means that by investing in a hedge fund, you transfer your money to a professional manager and become a beneficiary (beneficial owner).
- The principle of free and unlimited control. It is based on a minimum of government regulations and control. So, in the USA even the Securities and Exchange Commission does not interfere in the organization’s work. On the one hand, the principle guarantees the maximum degree of freedom. On the other hand, the investor should be able to independently protect his interests (for example, in the case of a trader’s fraud).
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As a result, hedge fund software has the following features:
- gives great flexibility and the ability to follow any investment strategy, including an aggressive one;
- provides a large choice of potentially profitable investment assets with limited availability for other investors: foreign issuers’ papers, precious metals, exchange derivatives (futures, options);
- provides opportunities to use the most advanced financial technologies (fintech, blockchain);
- limits participation and sets strict requirements for investors — funds are intended only for professional investors.
Strengths of hedge fund software app development
The fact that the stock trading risk is always present, even beginners know. The activities of such organizations also belong to high-risk events. But at the same time there are much more positive points than negative ones:
- Work is carried out not only with valuable securities, which have a tendency to increase but also with depreciating assets and with a big profit.
- If there are illiquid low-income assets in your investment portfolio, the activities of such a fund that can bring you profit.
- Since the task is to reevaluate low-income instruments, this reduces the risk of possible loss of money during trading in the future.
Hedge fund software services: types of hedge funds
- Global funds are funds that operate in the markets of all countries. However, they build their investment strategy on the basis of studying the quoted price of individual company behavior.
- Macro funds operate in the market of a particular country, for example, exclusively in the American or Chinese. They make decisions about the opening of a position on the basis of the macroeconomic situation in it.
- Relative cost funds are classic hedge funds that operate on national markets and use a standardized work scheme. It relies on the difference exists in the relative prices of assets that are interrelated. These funds use the same principles that were applied by the first funds, which we talked about above.
Stages of hedge fund software development
- Discussion of the problem. Calculate the approximate cost of the project.
- We conclude a contract.
- You make a prepayment.
- We collect and analyze the requirements. We plan resources for the project.
- We write the technical task. Finally, we estimate the cost of work.
- We design the system. We make UI / UX design. (You get interface layouts and a description of the interactions).
- We program.
- We do testing.
- We finalize and implement development.
- We accompany and develop the project.
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Hedge fund software development with KATASIS
We create smart software products that help businesses and financial institutions to automate complex, time-consuming business processes and also to identify, prevent and combat financial crimes, to create and improve strategies that prevent fraud, money laundering, corruption and other crimes using modern information technologies and software analytical systems.
More than 3 years experienced key specialists in the field of software development for business and financial institutions, dozens of completed projects, well-functioning development methodology and accumulated competence in the subject areas allow the company to offer the client products and services of the highest level.