Modern Investment Operations to Thrive in Public-Private Asset Class Convergence
Asset management firms’ appetite for the diversification benefits of increasing private markets exposure is equaled only by their frustration with their top challenge: integrating the offerings into portfolios. Managers want to satisfy investors’ increasing preference for finding the right balance in portfolios and a more active focus on specialization, customization, and thematic and sectoral investing.i Firms have devoted considerable resources and intellectual equity in trying to piece together the public-private asset class convergence puzzle from a data and operational perspective.
Different firms assuredly have different concerns when crafting their operating models. But all firms share the common need to have real-time, precise viewability, both in full portfolio views at the asset manager level and in portfolio composition at the client level.
Here is a primer to guide asset management firms in selecting the correct paradigm for their specific needs, an operational platform that neutralizes the impossible complexity of cross-asset convergence and prepares them for future market needs.
Operational challenges represent a heightened level of complexity
Client portfolios are increasingly mixing public and private assets, in instruments like separately managed accounts (SMAs) for high-net-worth clients. Firms have embraced the total portfolio approach to reap the benefits of cross-asset diversification, including improved dynamism of decision making and a greater focus on risk factors in portfolio construction.ii Reporting performance for public and private asset mixes calls for different sets of metrics that speak different languages. The system must be able to make sense of the intersections between total return and IRR numbers, MOIC and Sharpe ratio numbers, and so on. And we’re only talking about a full portfolio view for asset managers at the client level. Zoom out to the asset manager view, and we get a new flavor of complexity.
Why full portfolio visibility matters
McKinsey’s recent study of 50 of the largest traditional and alternative asset managers revealed that firms that were able to offer a full breadth of portfolio building blocks to deliver solutions at “the level of the whole portfolio” produced substantial net flows and above average revenue growth.iii Asset managers need a complete view of assets across both public and private classes for items such as risk exposure, total assets under administration, and performance analytics. This calls for stout but smoothly running operational workflows on top of an organization’s data platform to support these integrated performance frameworks. This combination requires systems that can handle valuation, performance, and corporate actions across both public and private assets.
Firms are increasingly looking to strategic partnerships and M&A to reinvent their business models, and 34% of CEOs say that an average competitor will be out of business within three years if it doesn't change its current business model.iv To survive and thrive in the complexity of public-private asset convergence, CTOs will find they have two primary operation models to choose from.
Model 1: unified, end-to-end platform for simplicity and efficiency
It may seem a foregone conclusion that CTOs will favor a single end-to-end platform for front-to-back investment ops. There are plenty of benefits, including the reduced number of vendors you're dealing with and the integrations and scale that come with a unified platform. It is a solution that many vendors support, and drives concrete efficiencies in operations. This model is preferred by smaller, less complex firms focused on efficiency that did not grow by acquisition. For example, a firm with $15 billion–20 billion AUM demonstrating a focus on efficiency and organic growth from public to private, without complex acquisitions, will do well in using a unified, single operational platform. Such money-saving efficiencies are particularly compelling to firms struggling to control ballooning costs.
Additionally, if a firm leans heavily on managed services due to either resource constraints or a focus on efficiency, this model is likely the better choice. CTOs appreciate the lower risk associated with integrations and prefer dealing with a single platform that simplifies the managed services structure. Utilizing a single platform that covers the breadth of asset classes allows firms to pivot quickly into new strategies (e.g. moving into private credit) without incurring the expense and time delay of setting up entirely new technology and hiring new specialized teams.
However, for firms whose priorities move toward becoming more agile and helping the business launch new products, another approach often becomes necessary.
Model 2: data management and unification for agility and scale
Larger, more complex asset management firms may enlist multiple vendors providing separate managed services, which complicates the matrix. Such firms may need sharper agility for ad hoc business needs and more bespoke operational capabilities, especially if they have grown through acquisition and cannot easily rip and replace. In situations when a firm expands with acquisitions, sometimes the acquired entity may resist replacing their existing bespoke platform.
If a big firm buys a few affiliates, they will come into the operation with their respective platforms, let’s say private credit, private equity, and infrastructure. It may be cost prohibitive to take them all out and just replace them with one unified operational platform. That scenario calls for a centralized data platform (which integrates easily with other platforms, out of the box) to bring all the disparate datasets under one umbrella and provide necessary workflows on top for performance reporting and analytics.
Cross-asset growth demands flexibility
The new avenues opening the retailization of private markets involves distributing private market funds to individual investors, often through hedge fund alternatives and evergreen fund structures like interval funds or business development companies. These structures introduce complexities such as valuations, wherein infrastructure must synchronize valuation cycles between liquid and illiquid assets to produce a unified NAV. In this case, using a unified data platform to bring together data from various existing public and private platforms is an ideal solution.
Product offerings themselves are moving towards hybrid public/private structures versus pure plays. With nearly 90% of global companies already private, and debt financing increasingly sourced and serviced from non-bank lenders, access to broad global economic beta is impossible without private market exposure. Investors are eager to find multi-asset solutions that provide access to the faster-growing new economy, diversified risk premia, and a range of return drivers. — John L. Bowman, CEO of the CAIA Associationv
If an asset manager wants to expeditiously bring a new product to market, in an asset class which its primary platform does not yet support, it will need a flexible operating model. The platform must maintain a consistent source of data that integrates seamlessly with portfolio management, trading and order management, and risk systems. This model requires out-of-the-box integration capabilities to pull in data from various platforms and must be able to process data through connectors and pipelines that smoothly ingest and normalize the data. Moving forward, the system must also maintain the data integrity quality as new datasets are integrated or changes are made.
Flexible, future-proof operational frameworks to handle asset class convergence
Regardless of asset management firms’ current choice of unified end-to-end platform or unified data management platform, we advise them to install systems that give them flexibility to scale and adapt to new business conditions. Firms face a balancing act to determine whether a single platform can manage all asset classes, or if they need to build greater interoperability to move and aggregate data efficiently between separate, specialized platforms.vi Firms may need to toggle between operating models as their needs change.
Public-private asset class convergence tops the list of global asset management technology trends for the foreseeable future. No matter a firm’s size, structure, or strategy, CTOs and chief data officers should not box themselves into an inflexible corner that prevents adaptation. High performing managers are positioned to respond quickly to new market conditions, regulatory changes, or creative portfolio ideas with nimble pivots to launch new businesses, change portfolio views, or distribute risk across managers without significant delays.
Authored By
Mahesh Narayan
Mahesh oversees Arcesium’s capabilities for institutional asset managers, including the Arcesium Data Platform, middle- to back-office solutions, and associated financial operations.
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[i] Index Industry Association, 2024 Survey of Asset Managers. https://www.indexindustry.org/wp-content/uploads/2024-IIA-Survey-of-Global-Asset-Managers.pdf
[ii] Thinking Ahead Institute, 2020. https://www.thinkingaheadinstitute.org/.../Total_Portfolio_Approach-1.pdf
[iii] McKinsey, 2025. https://www.mckinsey.com/industries/financial-services/our-insights/asset-management-2025-the-great-convergence
[iv] PwC Pulse Survey, June 11, 2024. https://www.pwc.com/us/en/industries/financial-services/library/asset-wealth-management-trends.html
[v] CAIA, 2025. https://caia.org/content/january-2025-next-here-private-and-public-market-convergence
[vi] Accenture, 2025. https://www.accenture.com/content/dam/accenture/final/a-com-migration/pdf/177/Accenture-Capital-Markets-Towards-Markets-of-Tomorrow.pdf
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