Meeting the demands of multi-asset strategies

Institutional asset managers are increasingly investing in multi-asset strategies as they look to expand into new markets, broaden their global reach, and diversify their portfolio.

Yet, operational processes and systems infrastructure often struggle to support the investment activities of multiple asset classes and managers converging in one investment portfolio.

For institutions investing in multi-asset strategies, they must be ready to support investments in any asset class around the globe. What’s more, institutions must be primed to aggregate underlying data to create consolidated and sleeve-level views to manage risk, analyze performance and net margin requirements, and optimize the overall portfolio. For institutional asset managers seeking diversified portfolios that go beyond traditional asset classes, their financial platforms must be able to adapt to this evolving trend.

The question that arises: Is your platform ready to support multi-assets?

What are multi-asset investments?

Multi-assets refer to the inclusion of the various asset classes in an investment portfolio. Traditionally, institutional asset managers focused their portfolio on investments in the public markets. Today’s contemporary investment landscape demands a more diversified approach. The concept of multi-assets has gained significant traction. Multi-asset class investments offer exposure to a range of asset classes, sectors, investment strategies, and individual security exposure.

The benefits of a multi-asset class platform

Multi-asset class platforms equip firms with the insights they need to track performance and identify new opportunities for growth. By unifying public and private investments on a single platform, firms are empowered to:

  • Quickly adapt to market changes
    Asset classes have varying degrees of sensitivity to economic conditions. A multi-asset class platform enables investors to adapt their portfolios to changing market environments. During times of economic expansion, firms may decide to allocate more to growth-oriented assets, whereas defensive assets might be appropriate during periods of uncertainty.
  • Enhance returns
    Multi-asset class platforms offer the potential for enhanced returns by tapping into various market opportunities. When equities are booming, commodities or real estate may also experience favorable conditions. Strategically allocating assets lets investors capture the upside potential across the public and private markets.
  • Gain global investment exposure
    Facilitating global diversification, multi-asset class platforms allow investors to access opportunities beyond their domestic markets. Investing in international equities, bonds, or real estate provides exposure to different economies and can act as a hedge against country-specific risks.
  • Diversify their risk
    Combining the unique risk and return profiles of different asset classes allows investors to mitigate the impact of poor performance in one asset class. For example, during economic downturns, stocks may underperform while bonds provide stability. By holding both in a portfolio, the overall impact is less severe.

Managing data and convergence

As the lines between asset classes blur, firms need an agile, integrated platform to enable public and private teams to collaborate effectively. Re-platforming applications to support asset class convergence can go a long way toward an asset manager’s success.

By unifying data from numerous disjointed systems, asset managers can minimize the need to maintain manual files and processes. Automating calculation of key performance metrics including multiples and IRR, often laborious and complicated processes, can also help firms.

While regulations are fewer than public markets, private funds are still subject to certain reporting requirements and federal rules that will only increase over time. A bi-temporal data model can help organizations maintain integrity on asset attributes with detailed audit capability, preparing them for future regulatory changes in private markets.

The practioner’s guide to integrating data and analytics

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To create the transformative outcomes that drove their initial interest in new asset classes, firms must continually evaluate the capabilities and advanced technologies that enable business intelligence. From upskilling professionals, to tightly integrating operations, data, and analytics, asset managers must ensure they are examining all aspects of their operations.

Re-platforming data and technology is necessary to support the convergence of investing in a new asset class. An integrated platform that enables collaboration between public and private teams is essential for success. Institutional asset managers must continually evaluate advanced technologies to enable business intelligence and uncover valuable insights.

Using technology to create transformative outcomes

In principle, data, analytics, and investment processes are comparable for public and private companies. However, the variances between the two asset classes are substantial enough to require re-platforming of existing systems.

As firms increasingly invest in new asset strategies, an asset manager’s platform needs to speak the language of the new asset class – capital calls, schedule of investments, cash flows, and more. The nature of what’s captured, such as data used for valuations and performance calculations, is different between the public and private markets. Data for private investments also requires integration from a new set of vendors, partners, and administrators so that managers can aggregate information to understand exposure, risk, cash and investment needs, and full portfolio reporting.

Platforms for public and private assets must be able to work cohesively together to give managers an accurate and holistic view of their investment portfolio. Building a shared data platform to unify data and operations across public and private investments empowers firms to aggregate holdings, performance, cash flows, risk analytics, and reporting.

IN CASE YOU MISSED IT: PAAMCO Prisma Joins Arcesium Technology Platform

Case study: Supporting multi-manager strategies

Market challenge

A large asset manager was looking to expand into a broader range of new markets and asset classes. The firm struggled to clearly track investment flows and data. Numerous requests for customization also made reporting increasingly difficult.

Solution

Using our SaaS platform’s financial data stack and multiple integration mechanisms, we helped the client:

  • Consolidate data on one platform to manage investment flows and enhance line of sight into their cash available for trading
  • Integrate structured feeds to efficiently monitor daily FX exposure across global active equity funds, benchmarks, and custodians
  • Automate complex investor and client reporting across performance, holdings, and transactions

Result

A unified data platform and powerful business intelligence tools now enable our client to efficiently report to stakeholders and gain a competitive edge as they explore new markets and asset classes and respond to changing industry demands.

READ THE FULL CASE STUDY: Operationalizing Multi-Manager Strategies

What are the key elements of a multi-strategy platform?

  • Seamless data ingestion
    Tools that enable you to easily ingest data from market data vendors, service providers, third-party applications, cloud marketplaces, and internal applications such as accounting, CRM, risk, internal databases, and spreadsheets.
  • Organized information
    Fit-for-purpose data models organize disparate information and generate an accurate, synchronized source for your investment data, including funds, positions, and performance data.
  • Clean and enriched data
    Turn data into trusted information with data quality and exception flagging tools and an extensible data model that enables users to create new fields on the fly.
  • Extensive data lineage
    Data lineage capabilities keep you confident in the accuracy of your data by understanding where the data is coming from, if it’s been transformed and tagged correctly, and loaded to the right location within the data warehouse.
  • Robust integration capabilities
    Integrations with external order management systems (OMS) and internal risk systems create seamless data ingestion and access. In addition, integration with proprietary portfolio analytics systems and other downstream applications enables e­fficient analytics and reporting that help asset managers make more informed decisions.

How a unified data and operations platform can help firms respond to a changing market

Firms must continually evaluate the capabilities and advanced technologies that enable business intelligence and empower them to create the transformative outcomes that drove their initial interest in new asset classes. By continuing to push against traditional industry boundaries, while modernizing tech ecosystems, asset managers will be in a stronger position to think beyond operations and focus on uncovering the insights that matter.

Join our upcoming webinar with Confluence to learn how next-generation analytics and reporting are enabling institutional asset managers to unify financial platforms.

 

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