How do you meet clients’ investment performance expectations in an environment of record low interest rates and extraordinary monetary policies? The answer for many asset managers has been to move into multi-asset strategies in the search for alpha, diversification and capital preservation.
The rationale seems obvious enough. But while adopting a multi-asset approach offers opportunities for growth, supporting the more complex portfolio management requirements involved creates considerable technical and infrastructure challenges. And all too often, firms’ existing systems simply can’t handle the new asset classes.
The technology demands should not be underestimated.
What we typically see instead are short-term tactical fixes.
In many cases, diversification starts slowly, as managers dip their toes into a new market, region or strategy. With the help of workarounds or manual processes, they then find ways to manage these new assets on their existing systems.
But once those handful of swaps or multicurrency positions start ramping up into higher volumes or more complex workflows, this approach becomes unsustainable. The result: operational inefficiencies, increased overhead, heightened risk, data accuracy and data management concerns, and a growing inability to service clients efficiently.
We often see similar problems arise following an acquisition or merger.
Buying a new strategy, or acquiring expertise in target markets is a fast way for firms to diversify their capabilities and take advantage of new investment opportunities. Yet M&A activity typically means firms end up with multiple or disparate systems – perhaps one supporting listed securities, and others handling swaps or bank loans. Cumbersome manual processes or expensive IT projects are then needed to bring these systems together into some semblance of an integrated infrastructure.
True multi-asset capabilities
If managers want to be successful, truly multi-asset players though, they will need a seamless operating model that can support their current business, and enable future growth and expansion. Sustainably. Firms need to future proof their infrastructure with rich multi-asset and multi-account functionality that enables them to focus on meeting the challenging demands of today’s environment while be prepared for what lies ahead.
That tactical, piecemeal operational approach may seem to make sense as you explore new market opportunities. But for any firms with growth ambitions, a comprehensive solution with the flexibility and scalability to consolidate all your business into a single environment is the only way to compete successfully.
Learn more about Geneva®, SS&C Advent’s award winning solution for Asset Managers.
Asset Management, Alternative Investments