Inside Public Cloud Strategies at Top Hedge Funds, Private Equity


  • Buy-side firms are increasingly looking to migrate workloads to the public cloud.
  • Some view the move as a recruiting tool, while others hope to cut costs and increase compute power.
  • Here’s an inside look at six firms’ strategies when it comes to the public cloud. 

The buy side is aiming for the clouds.

Top hedge funds, investment firms, and private-equity shops are turning to public clouds managed by Amazon Web Services, Microsoft Azure, Google Cloud Platform, and IBM. 

Specific motivating factors for the switch varies at individual firms, but a common theme among nearly all of them is the realization that the public cloud is a more cost-effective option than physical data centers. 

The migration of buy-side firms to the cloud comes as providers are increasingly targeting Wall Street with finance-specific offerings. Firms are also picking one public cloud as a preferred or primary partner

Insider spoke to tech executives at the top firms on the buy side to understand their cloud strategy. Here’s how they’re approaching the tech migration, and the benefits they’re already realizing from the move.


AQR

Stephen Mock, principal and co-chief technology officer, AQR.

AQR


Moving workloads and data to the public cloud is a big tech lift for any firm. But for $137 billion quantitative investment manager AQR, it was a welcome one. 

Quantitative research is the bread and butter of AQR, a value-oriented investment manager that typically takes a longer-term view on its portfolio. As with other quantitative funds, that means access to readily-available financial and economic data — and lots of it — is paramount. 

And while transitions to the public cloud carry an up-front cost, more financial firms are embracing the value they see in the cloud relative to on-premise data storage.

But for AQR, a move to the cloud was approached much the same way it handles investing: meticulous planning and research. 


Blackstone

John Stecher Blackstone

Blackstone’s John Stecher.

Blackstone


As firms across Wall Street embrace public and hybrid cloud strategies to boost their tech prowess, one private investing giant is looking to Amazon Web Services.

John Stecher, Blackstone’s chief technology officer, told Insider the private-equity giant is in the midst of a “firm-wide initiative” to migrate much of Blackstone’s technology operations to Amazon Web Service’s public cloud by roughly the end of this year.

“We want to be able to use best-of-breed hardware and software programming models that AWS gives you to be able to deliver features and function at the speed that the business needs and that our engineers are truly capable of,” Stecher told Insider.


Citco

Albert Bauer Citco

Albert Bauer is a managing director for Citco.

Citco


There’s big cloud-migration projects, and then there’s Citco.

The fund administration giant, with $1.6 trillion in assets under administration, took 18 months to migrate $1 trillion of those assets — from more than 550 hedge funds and other clients that total 10,000 accounts — from physical data centers to the cloud.

Hosted on Amazon Web Services, these accounts now have a more streamlined administration of their portfolios, and access to different tools Citco has built out on the cloud, such as a software-as-a-service tool that helps managers with Treasury functions. 


Millennium

izzy Israel Englander

Millennium Management founder Israel Englander.

Phil McCarten/Reuters


As the war for talent rages among hedge funds, one firm is using technology as a key value prop for recruitment and retention.

Millennium Management, the New York-based hedge fund founded by billionaire Israel Englander with $52.3 billion of assets under management, is investing in cloud technology to stand out among hedge funds.  

Michael Brams joined the firm in 2016 to help build out Millennium’s cloud capabilities. The first production use case, a large-scale data analytics tool set for compliance, went live in late 2017.

The firm saw how much faster its employees could test new tools and datasets using the cloud, which led it to invest more in the tech. 


Point72

2021 01 30T225709Z_2_LYNXMPEH0T0KL_RTROPTP_4_RETAIL TRADING COHEN.JPG

Point72 founder Steve Cohen.

Lucy Nicholson/Reuters


Point72 is in the midst of a sweeping, multi-year overhaul to transform the $21.8 billion hedge fund into a cloud-first operation.

The five-year project, which is slated to wrap at the end of 2024, is aimed at migrating 70% to 80% of the hedge fund’s cloud-eligible applications to the new tech. Currently, 20% of this work has been completed.

The $21.8 billion fund is also re-architecting its entire tech stack; building out a team of at least 60 cloud engineers, infrastructure coders, and application developers; and solidifying a hybrid, multi-cloud strategy, Mark Brubaker, the chief technology officer, told Insider.


Two Sigma

David Siegel Two Sigma

David Siegel, cofounder and co-chairman, Two Sigma Investments.

Two Sigma


Two Sigma had a big problem in 2014: the compute power needed for the quantitative fund’s research workflows was 10 times greater than what its data centers could provide.

“We said, ‘You know what, we’re not going to build out a 10x physical presence. That’s just enormous, that feels wrong to us,” Camille Fournier, Two Sigma’s head of platform engineering, told Insider.

As a quantitative fund, the problem was particularly salient for Two Sigma. Quant funds rely on mathematical and computer-based modeling to make their bets in the market, meaning their demand for computer firepower can often be enormous. Two Sigma, founded by billionaires John Overdeck and David Siegel, is known for pushing the limit on computing and data usage, even amongst its fellow quant peers.

Instead of building more physical data centers, the decision was made to push the fund into the public cloud.



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