New Research on the Importance of Institutional-Grade Infrastructure on Winning Allocator Confidence and Growing a Fund
In its newly published report, “Q2 Hedge Fund Manager and Allocator Survey,” Hedgeweek uncovers essential insights for hedge fund managers looking to launch or scale their funds.
The report draws on contributions from Columbia Business School, industry experts and SS&C Advent to explore how infrastructure shapes a hedge fund’s long-term success.
But what sets this research apart is the direct input from allocators and fund managers themselves. Their firsthand feedback reveals how allocators evaluate opportunities in today’s environment and how fund managers adapt to rising institutional expectations.
This blog post distills some of the key findings, showing why institutional-grade infrastructure is no longer optional for emerging and start-up hedge funds — it is foundational.
Read on to understand the technical and operational pillars that can make or break a fund’s growth.
Institutional Operational Infrastructure: The New Requirement for Hedge Funds
Increased regulation, such as the SEC’s sweeping private fund adviser reforms and the AIFMD II and SFDR in Europe, creates new challenges for hedge funds.
In Hedgeweek, Michael Weinberg, Adjunct Professor of Finance and Economics at Columbia Business School, notes, “The regulatory burden, including legal and compliance, has risen dramatically, both in the US and particularly for managers with a research or marketing presence in Europe.”
In this climate, the absence of institutional-grade infrastructure has gone from being a red flag to a deal-breaker. Infrastructure, which was once a competitive advantage, is now a baseline expectation. Without it, many allocators won’t even take the first meeting.
According to the Hedgeweek research, 56 percent of allocators consider institutional-grade service providers a minimum requirement for emerging managers. These expectations encompass the core elements that signal a fund is prepared for institutional scrutiny and scale, including cybersecurity, compliance systems and integrated reporting.
“A manager can have the most compelling strategy in the world, but if they don’t have proper operational infrastructure, we simply can’t take that reputational risk.” – A senior allocator at a European firm with over $5 billion in alternative investments
In short, allocators aren’t just investing in performance—they’re investing in the process.
And as Hedgeweek emphasizes, that process must rest on a technology and operational foundation that meets institutional standards from day one.
Growing A Hedge Fund: Gaining a Competitive Edge with Scalable Operational Infrastructure
While establishing a strong operational foundation is critical at launch, Hedgeweek research shows that it is increasingly important as hedge funds enter the next phase of growth.
Emerging managers that aspire to scale – whether by launching additional funds, expanding into new strategies or attracting larger institutional capital – need infrastructure that not only performs today but evolves for tomorrow.
As Aani Nerkeler, Managing Director at SS&C, explained to Hedgeweek, “The operational priorities for hedge funds evolve over time. At launch, the pressure is on to demonstrate efficiency and reliability. But as managers scale and investor trust is established, the focus shifts toward sustaining alpha, which places even greater demands on operational agility."
Yet as they grow, many managers run into friction. Whether it’s integrating new asset classes, handling more complex investor reporting or navigating multi-jurisdictional compliance, the operational load increases quickly. Without the right systems in place, scaling becomes reactive and inefficient, introducing risk right when the opportunity to create alpha is highest.
Both allocators and fund managers need confidence that the underlying technology can scale in tandem with the fund. Institutional-grade infrastructure should offer flexibility, automation and visibility at every stage—from onboarding new investors to launching new vehicles.
Demonstrating this level of foresight and infrastructure maturity can be a decisive edge. It signals to allocators that the fund isn’t just built for performance—it’s built for growth.
What Is Institutional-Grade Infrastructure for Hedge Funds?
We’ve covered that, for hedge funds, investing in the right institutional infrastructure isn’t just about checking boxes for allocators; it’s about building a scalable foundation for long-term growth.
But what does “institutional grade” really mean in today’s market?
While 56 percent of industry respondents cite institutional infrastructure as essential, the definition itself is evolving.
As Michael Weinberg notes, the universe of acceptable providers has expanded, opening access to technology and allowing more firms to compete.
In this shifting landscape, hedge funds no longer need to rely solely on legacy providers. What’s needed now is a flexible, high-quality infrastructure, delivered by nimble partners who understand the demands of emerging managers and established firms alike.
7 Infrastructure Essentials for Institutional-Grade Hedge Funds
7 Infrastructure Features Hedge Funds Need to Trade, Account and Scale Confidently
With a unified investment platform, a modern hedge fund can meet the demands of today while seamlessly scaling as strategies evolve and complexity increases.
Below are 7 essential features to look for in institutional-grade infrastructure, and the benefits they deliver for both startups and emerging managers.
1. Unified, Front-to-Back Functionality
End-to-end integration, from investment idea generation to accounting.
The Hedgeweek survey reveals that while all hedge fund managers view front-to-back office integration as “very important” or “critical," there is a clear divergence between small and large funds.
Among smaller funds (sub-$1bn managers), 45 percent rate integration as “very important” or “critical.” But among larger funds ($1bn+ managers), the percentage grows: 88 percent rate of integration as “very important” or “critical.”
This emphasis underscores a growing consensus among fund managers: operational cohesion is no longer a nice-to-have but a competitive necessity, especially as a fund grows.
An integrated platform that unifies portfolio management, trading, operations and accounting eliminates the inefficiencies of disconnected systems. It reduces reliance on multiple vendors, minimizes manual data handoffs and simplifies the entire workflow.
For new fund launches, a single system lowers infrastructure complexity and shortens time to market. As the fund scales, consistent data across the front-to-back office ensures it can grow without operational friction.
2. Support for Diverse Strategies and Expansion
Flexibility to launch lean—and grow without limits.
According to Hedgeweek’s survey, managers cited expansion into new asset classes and strategies as their top operational challenge.
At the same time, 67 percent acknowledged that their current infrastructure limits their ability to manage across multiple asset classes.
These challenges show why emerging managers need platforms that can support a broad range of asset classes, geographies and fund structures from the outset. A modern system should accommodate focused strategies at launch while enabling seamless expansion over time that doesn’t require costly migrations or disruptive rebuilds.
For startups, this flexibility means launching lean without boxing in future growth. As funds scale into more complex, multi-asset or multi-entity structures, easily onboarding new strategies is both a strategic and operational benefit.
3. Cloud-Native Architecture
Scalable, cost-effective and built for speed.
The Hedgeweek survey found that over 60 percent of North American allocators are more comfortable backing managers who present a clear roadmap for operational scaling.
For emerging hedge funds, this signals that scalable, resilient infrastructure is not just a technology decision; it’s also a fundraising advantage.
Cloud-native platforms give managers the flexibility to scale efficiently, without the burden of upfront infrastructure investments. Faster onboarding and streamlined operations make it easier to meet both investor expectations and day-to-day demands.
With seamless updates, global accessibility and the ability to expand users, data and workflows without disruption, cloud-native platforms empower firms to move faster with fewer barriers.
4. Deep Accounting and Reporting Functionality
Real-time accuracy, allocator-ready transparency and controls that scale.
No matter where a hedge fund is in its growth strategy, centralized accounting and reporting capabilities are essential. Look for platforms with robust general ledger support, flexible and automated reporting workflows and tools built for institutional scrutiny.
Technology should provide Investment Book of Record (IBOR) functionality, giving the organization a live, accurate view of positions, cash and P&L throughout the day. By ensuring data consistency across teams and systems, an IBOR enables better decision-making and reduces operational risk.
An IBOR also lets startups gain allocator credibility right out of the gate. Emerging managers benefit from efficient audit prep, streamlined investor communications and firm-wide confidence in the numbers.
5. Shadow Accounting Capabilities
Independent oversight, institutional trust.
Hedgeweek’s survey found that nearly 90 percent of allocators in North America and Europe view maintaining a shadow book of records as a priority.
For fund managers, this reflects growing client demand for transparency, oversight and operational control.
To meet those demands, managers must look for platforms that offer real-time shadow accounting; parallel books that mirror administrator records. This capability strengthens internal controls by enabling independent verification of NAV calculations, cash positions and investor allocations.
For startups, shadow books help establish allocator confidence from day one. For emerging managers, they reduce reliance on third parties and provide faster, more accurate oversight as fund structures become more complex.
6. Real-Time Access to Portfolio Data
Instant visibility, informed decisions.
Whether just launching or scaling globally, hedge funds rely on real-time access to live positions, exposures and performance metrics. A modern platform should provide instantaneous data that reflects market moves, trade activity and portfolio impact with precision and clarity.
For startups, this visibility helps accelerate decision-making. As firms grow, real-time insights become critical infrastructure, enabling collaboration across teams, faster responses to market shifts and tighter control over increasingly complex strategies.
7. Managed Services
Operational leverage without growing headcount.
A strong platform should offer the option to augment the fund’s in-house team with managed services. Co-sourcing functions like reconciliation, data onboarding or post-trade processing enables managers to scale up operations without over-hiring or overstretching their staff.
For startups, these services provide critical support without the cost of building a full operations team. For emerging managers, it helps maintain institutional-quality operational execution and oversight as the business scales.
Together, these capabilities form more than just infrastructure—they create a launchpad. For startups, they offer simplicity, speed and credibility. For emerging managers, they provide the control, transparency and scalability needed to meet institutional expectations without sacrificing agility.
Institutional Grade Infrastructure is Within Reach: Eze Eclipse
In today’s landscape, hedge funds must meet rising allocator expectations while staying agile enough to pursue alpha across evolving strategies. Historically, it’s been difficult to find technology that delivers both operational rigor and strategic flexibility.
SS&C’s Eze Eclipse changes that.
Eclipse offers an institutional-grade infrastructure that scales with the fund’s business. Its flexible, cloud-native architecture supports the full investment lifecycle across asset classes, all within a single, unified platform.
Hundreds of firms rely on Eclipse to streamline operations, enhance transparency and adapt to change. Users can stay connected to their data in real time by securely accessing the platform from anywhere via web browser or mobile device.
And, as the needs of a hedge fund change, Managed Services allow managers to delegate routine daily and monthly workflows to specialized accounting and operations experts, allowing a fund to scale efficiently without adding overhead.
Learn More
To learn more about the Hedgeweek research, watch our recent webinar.
And be sure to download your copy of the last research: The New Rulebook | How Operational Infrastructure is Becoming Hedge Funds’ Make-or-break Investment.To learn more about the Hedgeweek research, watch our recent webinar.
Get in touch to learn how Eze Eclipse can provide the institutional-grade infrastructure your hedge fund needs at launch and throughout the growth of your fund.
