Compliance and regulatory reporting systems top the list of areas in which alternative managers are investing, according to new figures from the accounting firm of EY.

EY conducted a survey among 209 participants, of whom 113 were from hedge funds and 96 from private equity. Most came from North America (141), with some coming from Europe (42) and Asia (26). A good 67 had AuM of more than US$10 billion; 90 had $2-10 billion; and 52 had under $2 billion. Greenwich Associates seems to have conducted the interviews between July and September. It asked managers and investors to comment on their plans for the decade ahead.

Compliance and regulatory reporting systems top the list of areas in which alternative managers are investing. Under the heading "all alternative funds," the firm(s) asked respondents the question: "In which functional areas did you make technology investments in the past two to three years (inclusive of outsourcing to third parties with enhanced technologies)?"

The results were:
Compliance and regulatory reporting.58%
Portfolio management.........................53%
Fund accounting..................................49%
Investor servicing................................42%
Data warehouse management.............41%
Middle office (including treasury).......34%
Tax........................................................17%
Valuation..............................................16%

Still under the rubric of "all alternative funds," the firm(s) asked the question: "If yes, have you seen a measurable return on investment?" For compliance and regulatory reporting, 55% said yes. The other replies were much of a muchness, although for tax the figure was a much higher 70%.

Slightly more than half of respondents indicated these various investments did have a measurable return on investment. The firm(s) asked the question: "Which of the following best describes how you achieved that return on investment?"

For compliance and regulatory reporting, 80% pointed to improvements in productivity; 8% pointed to direct cost savings; 7% pointed to outsourcing; and 5% pointed to 'other.'

The survey added: "The previous results indicated that the majority of managers are seeing ROI across the investments they are making in technology. There is little doubt, no matter the function, as to how managers are realising the return on their technology investments. The majority of managers report the benefits have come via productivity improvements, which also aids managers in their talent priorities. Advanced technology is resulting in automation of previously performed manual tasks as well as faster and more accurate process execution, each of which allows for a reallocation of resources to other tasks enabling the manager’s employees to focus on more strategic and value-added activities."