Asset managers are fortunate to have a number of fund structures to choose from to launch their various strategies, either within active or passive constructs. As ETFs have gained in popularity with investors for their low cost, tax-efficient, transparent and tradeable structures, asset managers have increasingly concentrated on the ETF wrapper for their new product launches. While the basic blocking and tackling of ETF management is very similar to other fund structures, managing a product that simultaneously trades on a listed exchange presents many new challenges for asset managers that may require additional expertise.
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As companies consider planning for orders being lifted and operations to resume, assessing the projects and tasks that were pushed to the back-burner is becoming a priority. As those items are defined, deciding how to navigate the backlog is the next step. Do you use in-house resources who are already working hard to get back to business as usual? Is now the time to consider outsourcing those projects to a group that specializes in managing these types of events?
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Recent volatility in markets worldwide is a timely reminder of the benefits of diversification in an investment portfolio. Since 2000, investment in private equity (PE) has significantly increased and provided investors greater diversification across growth assets. Over this time, private equity’s net asset value rose more than sevenfold globally, and PE-backed companies more than doubled to over 8,000 just in the USA, while the total number of publicly owned companies saw a modest decline. The increased usage of PE as an asset class across pension schemes, sovereign funds and wealth investors has created a need to provide analysis that accurately captures the investment performance of both the general and limited partners, across which fund expenses and distributions are allocated.
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To hear more about SS&C’s vision for the future state of alternative investment operations, watch out short video.
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Client and performance reporting is central to a manager’s ability to compete and differentiate; investment performance and quality of service are consistently ranked at the top of plan sponsors’ wish lists. However, these two functions are less automated and scalable than other less-differentiating functions. Adox Research data shows that a majority of firms struggle to exceed automation levels of at least 60% for these mission-critical activities, which clearly leaves value on the table in terms of automation headroom. If firms were able to reach 90% or higher automation rates, costs would go down, but more importantly, the risk of errors and customer dissatisfaction would be reduced.
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SS&C has had virtual conversations with several leading private capital companies, limited partners and industry stakeholders to gain insight into how the coronavirus (COVID-19) pandemic is affecting them now and what they see coming next. In our first post in this series, we focused on high-level observations and predictions. In this post, we will drill down into the different investment strategies and how these strategies are affected by COVID-19 and government intervention.
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A crisis might not seem like the time to evaluate your operations, but now is perhaps when opportunities to improve are most visible. Some of these potential areas in need of improvement are reporting, risk assessment, remote access, ability to scale up or down quickly, domain expertise and immediate access to information.
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Amidst the COVID-19 pandemic, asset managers have done an excellent job of adjusting their service and communication response—in both strategy and execution—even if some scrambling has been involved.
In speaking with executives, following press coverage and observing third party communications, we have spent significant time thinking about our clients working through “digital transformations.” Although this pandemic brings more pressure, the timing enables firms to strategize and tactically plan their digital transformations.
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