Seeing is Believing

WHY BOUTIQUE ASSET MANAGERS NEED BETTER VISIBILITY AND SMALLER MARGINS OF ERROR

In asset management, size matters...

In asset management, size matters...

… but visibility matters more.

In asset management, size matters...

… but visibility matters more.

A recent PwC report on managing risk and performance explains the point like this:

In asset management, size matters...

… but visibility matters more.

A recent PwC report on managing risk and performance explains the point like this:

“An integrated approach offers a new view of the old balance sheet.”

No matter the size of AuM, demand from today’s investors and regulators is for a joined up and single view of performance

and risk attribution.

INTEGRATEDAPPROACH

A single view means greateroverall visibility.

INTEGRATEDAPPROACH

A single view means greateroverall visibility.

We can see what happened, why and at what cost.

INTEGRATEDAPPROACH

This is important because visibility is king over performance, attribution and risk in today’s highly-pressurized asset

management world.

INTEGRATEDAPPROACH

A compelling combination

Seeing performance and risk analytics through the same lense gives a bigger and fuller picture.

“Linking risk and performance givescompanies the confidence to take

smart risks.”PwC

A COMPELLING COMBINATION

A single view of the data is something almost every buy-side investment manager now looks for.

It’s about having performance attribution coupled with comprehensive analysis of risk.

A COMPELLING COMBINATION

Several key industry trends are driving this:

• A shift toward risk-factor based allocation approaches.

• Pressure from asset owners for a deeper understanding of both performance and risk profiles.

• The need to compete with higher performing investment strategies.

BACKGROUND

Providing visibility is dependent on the ability to aggregate data.

The system and the data need to have the capacity to add value and work together.

Instead of data just coming in or leaving the system, there needs to be an analytic capability.

BACKGROUND

This shows:

• Previously unseen patterns.• Performance measurement according to the asset

manager’s own criteria.• Various ‘what if’ scenarios.• Anything else that the asset manager wants to do with the

data.

BACKGROUND

Smaller asset management firms have a lot to gain from developing this capability.

Smaller firms are able to quickly see what has happened, why and at what cost.

But they have less time to cross check and manually input data. They also have a smaller margin of error

when verifying the data is correct.

THE CASE FORBOUTIQUES

“The greatest opportunity to reduce risks and unnecessary expenditure will be through the elimination of manual

workarounds.”THE TABB GROUP

THE CASE FORBOUTIQUES

Agility is essential for boutique firms because their asset pools are affected by volatility, negative performance or

excessive risk more quickly.

“With their lean organizational structures and manageable asset levels, boutiques are the Bugattis of the investment world – designed for high performance

and developed to be able to respond rapidly to changing market conditions and new opportunities.”

SUNGARD ASSET ARENA 360

But when the machine is running smoothly…

Only when boutiques can combine performance and risk analytics can they

behave nimbly to move themselves out of harm’s way or, conversely, steer a course

into profitable waters.

VISIBILITYNEEDED

Internally, a better, single view of performance and risk also reveals inefficiencies.

A system that can provide this turns the

burden of performance and risk management into an opportunity to maximize efficiency

and investor value.

VISIBILITYNEEDED

VISIBILITYNEEDED

“Investment managers are placing greater emphasis on risk, compliance and performance

attribution technology platforms in an effort to address deficiencies and boost investor

confidence.”

SUNGARD ASSET ARENA 360

For smaller asset management firms, being able to harness technology to automate this process saves time and therefore adds value

from an efficiency and performance viewpoint.

THE CASE FORTECHNOLOGY

THE CASE FORTECHNOLOGY

“An integrated portfolio, trading, compliance and risk-management system that is capable of providing all of the functionality needed to plan,

execute and track trades and issue reports makes a particularly sound investment.”

SUNGARD ASSET ARENA 360

• Smaller firms need greater visibility.• They need to know what happened, when and why.• They need to know what might happen.• Understanding past and present means more

efficient steering of the ship in the future.• It also identifies where efficiencies could be made.• A system that can provide this turns the burden

of performance and risk management into an opportunity to maximize efficiency and investor value.

TAKEAWAYS

LOOKING FOR IMPROVEMENT IN YOUR

MIDDLE OFFICE?

Performance and Risk Analytics 2016-2020: How a combined approach can give boutiques the edge

Review how boutique asset managers are shaping up their middle offices for the future.

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