Investment operations and accounting solutions that leverage smart tools, such as Artificial Intelligence, Machine Learning and Natural Language Processing, offer levels of efficiency that simply cannot be attained by traditional technologies. The high cost of developing solutions based on these tools strongly favors firms that can sustain continuous investment in innovative technology development and expertise. To compete effectively, many emerging asset managers that cannot, or choose not to invest in next generation solutions will need to leverage a hosted solution or platform service model from a vendor that is heavily invested in this space.
EPC Capital Management LLC, a hedge fund specializing in equities, recently migrated its fund operations and accounting to SS&C Singularity™, the industry’s first ‘smart’ investment operations and accounting solution. An SS&C outsourcing client for several years, EPC recognized that Singularity’s advanced AI technologies, offered as an outsourced cloud-hosted service, would provide the optimal efficiency and transparency necessary for the firm to scale. EPC chose Singularity for its ability to perform middle and back-office functions. Singularity’s Machine Learning-driven automated reconciliation capabilities will significantly improve daily processing activities for the fund.
“We’re excited to move to a next generation technology platform that will allow us to efficiently scale while we remain focused on our returns and investors,” says EPC founder and Chief Investment Officer, Ernesto Perez-Carrillo III. “Since Singularity is web-based, the increase in transparency delivered by the application provides a more real-time view into various aspects of our portfolio, operations and the other enabling services provided by the SS&C team.”
Advanced Technologies Even More Critical for Managing Alternative Assets
Clearly, the ability to access next generation technology capabilities through a hosted solutions or platform service model is an important and valuable option for emerging asset managers who lack the scale and/or expertise to effectively leverage these new tools on their own. Moreover, as these investment professionals look to expand their portfolios into more complex, alternative assets, the value of AI-driven technologies such as natural language processing (NLP) and predictive analytics becomes even more critical.
Alternative investments require high volumes of typically unstructured and sporadic, yet detailed data that must be collected from various counterparties, including partners, administrators, property managers and other external data sources. The data needs to be carefully reviewed, parsed and then processed for accurate and timely revaluation of assets, their associated cash flows and revenue/expense streams. NLP capabilities can help automate the retrieval, review and parsing activities associated with large volumes of unstructured data and documents. Predictive analytics can also help by filling in and suggesting missing or delayed data values and elements based on common or historical activities associated with each asset or deal type.
The ability to keep pace with new technologies in investment accounting and operations is a critical success factor for emerging asset managers. Firms that have yet to leverage these technologies are already starting to fall behind. Partnering with a solution/service provider offering scale and expertise in this area can better position an emerging fund manager for enhanced profitability through improved top-line growth and bottom-line efficiency as well as cost reduction.
Written by Scott Kurland