The business of asset management encompasses a variety of functions and the requirement for fast, accurate and complete information to support these functions and investment decision making processes is key to our business.
Selecting a quality portfolio management system allows us to focus on the core business of asset management without the need of worrying about complex operational infrastructure, hardware and software. Therefore, a portfolio management system is a critical component of our business and with the evolution of technology it has become even more important that we continue to evaluate and embrace the opportunities generated by them.
Each asset management company has their own unique set of requirements for a portfolio management system. For us, some of the core requirements include:
- Operational efficiency and independence;
- Instrument coverage;
- Reliability and versatility;
- User friendly;
- Live profit and loss values;
- Live exposure and risk monitoring;
- Pre and post trade mandate monitoring;
- Access from any location and device;
- Electronic trading;
- Integrity and timeliness of position and accounting data;
- Reconciliation;
- Reporting;
- Ease of scalability
Weighing up each of these core requirements versus cost is where the difficulty comes as there are a wide variety of off the shelf portfolio management systems that vary significantly from a cost and functionality point of view. For start-ups, cost is most likely the biggest factor and they would therefore “give-up” some of their core requirements in order to bring down the costs. More established managers can be more selective with their core requirements as over time they would be able to allocate more budget. The real trick is in selecting an off the shelf system from the start that will be flexible and allow you to grow, adding more requirements over time as budget allows. There is of course the option of in-house development but for a start-up this can be expensive and difficult to manage.
Having a good relationship with a technology provider is just as important as system capabilities. Smaller providers tend to be more flexible, managing support and enhancement requests closely, whereas larger providers tend to be more rigid and have bureaucratic processes to follow. Not only should a due-diligence process be followed when going through system capabilities but it should also be performed on the company itself.
It is important to evaluate a system fully by going through a proof of concept or trial. This allows you to really put the system through its paces and evaluate it directly with your specific processes and requirements. Many providers will ask for a list of requirements and then say that the system can cater for these but it is only when you actually use the system that you truly see how it fits into your processes and caters for your requirements. Unfortunately, there aren’t many providers out there that allow for proof of concept or trials but more are coming to the party as they realise it is an important process for an asset management company to go through before committing to a system.