Thu, 06/09/2012 - 14:07
The lines between institutional asset managers and alternative investors are becoming increasingly blurred due to investment strategies, priorities and goals becoming aligned, according to Martin Boyd, president of SunGard’s asset management business.
“The relocation of assets to either alternative or traditional strategies puts greater pressure on funds to perform,” he says. “Therefore, fund managers are looking to technology solutions that help reduce platform complexity, increase risk management and maintain compliance to ultimately assist in the generation of alpha.”
SunGard has identified ten trends shaping the asset management industry. They are:
1. Business continuity plans are becoming more important to hedge funds due to investor demand.
2. Automated processes and simplified workflows will be key to helping hedge funds ease reporting requirements and reduce risk associated with the due diligence process.
3. While central clearing parties (CCPs) provide a solution for the valuation of standardised OTCs, complex products will require additional transparency and will need to be valued on a more frequent basis.
4. More fund managers will look at cloud solutions due to the lower cost of ownership, quick implementation time and scalability they provide.
5. To meet increasing big data demands and to clarify information, asset managers will need more analytics tools that help find alpha, correlations and create visualization on large data sets.
6. Due to a rise in its population’s wealth, China is becoming a key area of focus for investment in traditionally riskier, alternative investment funds such as hedge funds.
7. Mid-sized asset managers will feel squeezed due to cost pressures from the larger asset managers benefiting from economies of scale and will need to satisfy client demand for transparency and reliability in returns.
8. The new Form PF annual reporting mandates for investment managers in the US will require fund managers to have much more detailed analysis of individual investments, driving a move from siloed to holistic systems that can capture the full breadth.
9. In order to comply with FATCA mandates, asset managers will need to establish an online tax book with the flexibility to prepare accounting data for tax assessments in numerous countries.
10. The Euro-zone crisis will move East and Asian fund managers will need to find scenario analysis techniques to mitigate market risk.
Dushyant Shahrawat, senior research director, CEB TowerGroup, says: “Due to increasing market and regulatory complexity with mandates such as EMIR, Dodd-Frank and FATCA, asset managers have to consistently demonstrate transparency and better disclosure to mitigate risk. A key element of effective risk management is to have a holistic view of information before investment decisions are executed. The ability to focus on core competencies and new delivery models that increase efficiency and lower total cost of ownership will differentiate fund managers from their competitors and help grow assets under management.”
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