Building off of his previous article, Mark David discusses how a performance prototype takes a step beyond a performance data readiness assessment (PDRA) to identify undetected issues.
by Mark David, Senior Manager
Read Full ArticleBuilding off of his previous article, Mark David discusses how a performance prototype takes a step beyond a performance data readiness assessment (PDRA) to identify undetected issues.
by Mark David, Senior Manager
Read Full ArticleAre you overlooking potential performance impacts from your collateral management practices? Collateral management products can help optimize pledging collateral, reduce claims and fees, and reduce headcount.
by Jake Daly-Leonard, Consultant
Read Full ArticleHave you selected a new investment operations system to replace your legacy technology and manual workarounds? Or have you decided to outsource investment operations to a service provider?
Both efforts are significant, and likely the largest your part of the organization has ever seen. Are you making the right decisions? Or are you missing a golden opportunity to advance your business and improve the way you work? Here are three red flags you’re overlooking business transformation opportunities.
by Brian J. Lollar, Managing Director…
Read Full ArticleThe concept of a Performance Book of Record (PBOR) has continued to evolve across the investment management industry. This paper, which was featured in the Journal of Performance Measurement, outlines the state of PBOR today and why it can help firms leverage enterprise data for future growth.
by Richard E. Mailhos, Principal and Investment Performance Practice Lead
Read Full ArticleHas your outsource solution lived up to its expectations? Have real-world problems with integration and the production environment simply shifted bottlenecks or errors to new areas? Key operational components and workflows are the lifeblood of any large organization. But when decisions to outsource were made years or even decades ago, the criteria becomes dated and inapplicable. Don’t overlook these three signs it’s time to re-evaluate your outsource solution.
by Benjamin P. Smith, Client Partner…
Read Full ArticleAs financial firms seek to expand distribution, enhance efficiency, reduce costs and improve performance, they must also focus on the client experience. From the initial point of contact to ongoing client servicing and reporting, all interactions matter – and your clients are taking note. Negative experiences could lead to lost revenue, but positive experiences could be the key to unlocking future revenue. To ensure your business is staying competitive, consider these five trends shaping the client experience today.
by Timothy W. Jager, Principal…
Read Full ArticleFinancial services organizations have complex and rapidly-evolving data requirements. Whether it’s navigating compliance with ESG standards or diversifying investment products into complex derivatives instruments and alternative investments, the challenges feel never-ending or even flat-out impossible to solve. This begs the question: Are you controlling your data or is your data controlling you?
by John E. Leavy,…
Read Full ArticleSpreadsheets are one of the most powerful tools used by companies today, yet one of the most dangerous in common use across organizations. This paper details the risks and ways to mitigate them.
by Mick Cartwright, CIPM, Managing Director…
Read Full ArticleMeradia’s 2020 wealth management survey collates information from interviews with key executives in the industry. The participating firms range from small- to mid-size and specialize in wealth management and trust service and operations. The study surfaces how firms view market trends and potential future challenges and involves deep discussions about their internal operating models.
The final output is designed to give insight to the industry in the form of commentary rather than statistics, gauge how the market is feeling as well as how firms are managing their clients and businesses. The views are based on observations made by the executives who participated.
by Joshua B. Levitt, Principal
Read Full ArticleIn 1994, Denis S. Karnosky, Ph.D. and Brian D. Singer, CFA published a monograph entitled “Global Asset Management and Performance Attribution” (KS). They presented the idea that – due to the arbitrage known as interest rate parity – some contribution to the total return of a multi-currency portfolio is known, and ‘baked into’ a foreign-currency investment at the time it is made. Because this contribution is knowable and hedge-able, it should accrue to the currency market allocations of the manager – whether or not these are ultimately hedged.
While hugely influential among asset managers globally, these ideas remain largely unexploited in current performance practice. Though KS fully detail an attribution approach based on an expansion of the Brinson-Fachler method, and though this method is implemented in several commercially available performance systems – it is rarely adopted in the field.
We posit this circumstance to have arisen from several causes: misalignments between the paper’s formulation and practical investing reality, as well as inaccurate readings of, and consequently flawed implementations of the attribution method it sets out. We explore these causes in detail, and how they contribute to attribution results that fail to explain portfolio performance, obscuring the otherwise substantial value of KS’ central premise.
Finally, we develop a re-statement of KS that addresses those issues, producing an accurate decomposition of multi-currency effects that precisely explains the portfolio’s performance, while preserving the original paper’s essential insight. We go further to generalize this method and demonstrate its applicability to any investment attribution methodology.
by Mark R. David, CFA, Director of Performance, Risk and Analytics
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