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Enfusion Platform: An Integrated Front, Middle and Back Office Experience

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London (HedgeNordic) – Sweden is the third largest hedge fund hub in Europe, and the overall Nordic region is important for the Enfusion platform, which already has clients in Sweden, Finland and Norway. Enfusion is a leading provider of software solutions for the global financial industry, serving a diverse and impressive global client base of over 850 investment management firms, including hedge funds, family offices, and asset managers.

Enfusion’s clients span a wide range of sizes and strategies, from multi-billion dollar hedge funds with hundreds of end users and portfolios, to smaller emerging funds and asset managers with less than $1 billion USD in assets under management. Regardless of their size or strategy, these clients trade in various asset classes, such as equities, currencies, and fixed income, both in listed and OTC markets. Some of the common strategies they employ are long/short equity, global macro, credit, emerging markets, and event-driven.

Furthermore, integrated into the Nordic ecosystem, Enfusion has fostered strong relationships with both local and global banks and service providers, such as SEB, BNP, Nordea, Swedbank, Goldman Sachs, State Street, and UBS. Additionally, Enfusion works with numerous ESG-focused managers who seamlessly incorporate ESG factors, such as scores and ratings, into their portfolio management processes and compliance controls.

Enfusion’s single cloud-native system consolidates data and processes that are typically spread across multiple platforms into a unified database and toolset, enabling front, middle, and back office functions. Small, medium, and large managers rely on Enfusion to boost operational efficiencies.

“We work with new managers looking to build their target operating model as well as established managers aiming to simplify and renew their operating model,” says Enfusion’s Head of EMEA (Europe, Middle East, and Africa), Lotte Tonsberg, who works with Stephen Roberts on the Nordic market. They are based in the London office, and the global firm has nine other offices: Chicago, New York, Dublin, Hong Kong, Singapore, Sao Paolo, Bangalore, Mumbai, and Sydney.

Enfusion synchronizes data over multiple functions to give all teams complete oversight of trading, execution, positions, performance, portfolios, risk, liquidity, fees, etc. A unified platform is also helpful for risk management, regulatory compliance and associated monitoring, as well as reporting of liquidity, operational and regulatory risks.

Automation

“We achieve 90% automation for our clients through our front-to-back software on one single database,” adds Tonsberg. Automation helps reduce manual errors, which allows investment managers to focus on delivering returns and supporting business development. One example of a manager that appreciates this feature is Sweden’s Proxy P, a Stockholm-based manager focused on energy transition, who told HedgeNordic: “We needed an established, robust and well-renowned front-to-back solution. We decided to leverage the technology from Enfusion to minimize manual intervention, reduce operational risk and be able to scale the business”.

Operational Efficiency

“The Enfusion platform is multi-tenant and was born in the cloud,” says Tonsberg. “This means all clients are on the same version of the software and updates are released across the client base weekly. We also package the software with a security master managed by the Enfusion team,” she points out. Pricing is mainly determined by the number of users and interfaces rather than assets under management.

No Upgrade Costs

Cloud-native (since 2006) expedites the updating of the system for the benefit of all users. “Upgrades are a thing of the past. We release 300 enhancements per quarter, and our whole client base is on the latest version of the software through our weekly updates. Gone are the days of lengthy, expensive upgrades with entire consultancy teams working on upgrading the system with the client’s technical team running testing and validation of the upgrades,” says Tonsberg.

Modular Possibilities

Around 80% of the client base uses the complete front-to-back package, though some combine it with other in-house or vendor systems on a modular basis, using API for add-ons. For instance, some clients choose the Enfusion PMS, OMS, or post-trade system and integrate it with their own or other vendor systems. Onboarding times can range from 2 to 6 months, depending on the complexity of the offering.

Enfusion has evolved over many years since three developers started it as a technical consultancy. In 2006, it began as a portfolio management system (PMS) and progressed by adding building blocks such as a General Ledger, Execution, and Order Management System before adding more functionality.

Multi-Asset, Credit Market Nordic High-Yield Coverage

Multi-asset class coverage includes a single security master dataset from Refinitiv datascope covering every publicly listed product, so there is no setup involved when trading a new security. This makes it easier to launch new products and strategies as managers diversify their offerings.

Credit managers, including one of the world’s largest, welcome Enfusion’s coverage of OTC markets such as bank loans (described as “best in class bank debt/ syndicated loans processing” by one client), and Tonsberg, a Norwegian who studied at UK universities but grew up in the US, had first-hand experience of data issues when she sold Nordic High Yield bonds at DNB: “We know that the Nordic corporate bond market is a nuanced market that often needs some customized pricing data, and the same can be true for mortgage bonds.”

Testimonials

Readers should review detailed testimonial interviews on the Enfusion website coming from several leading hedge fund managers. Here, we highlight a few key takeaways from three of them.

A 2021 launch, Sparta Capital, was founded by Franck Tuil, formerly of Elliott Capital. The event- driven strategy invests across the whole capital structure in equity and credit, including listed and OTC derivatives such as CDS and TRS, as well as private credit. Sparta needed holistic coverage of all these asset classes and instruments. They also believe it is inefficient to have trading, accounting, PMS, and risk systems from different providers. Cost savings come from reduced reconciliation and fewer staff hours inside Sparta.

Melqart Asset Management, a hedge fund that trades complex alternative asset classes, streamlined its operations by switching from multiple vendors to Enfusion, a cloud-native SaaS platform that covers the entire investment lifecycle. Enfusion’s Middle Office Managed Services enabled Melqart to launch a new macro fund and expand its business with ease and efficiency.

Event-driven launch, CastleKnight Management LP, whose founder, Aaron Weitman, featured in The Hedge Fund Journal’s 2021 “Tomorrow’s Titans” report, selected Enfusion for its versatility in handling multiple asset classes and instruments across the capital structure; its ability to handle trades over the full trade life cycle, globally and around the clock; smooth coordination with the administrator, and a strong middle and back office solution. Remote access was also appreciated during the COVID-19 pandemic.

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