Service: Solution Design

What Exactly is a Performance Book of Record (PBOR) and Why is it Important to Next-Level Growth Across the Investment Management Industry?

The asset management industry comprises a diverse group of firms offering countless products, funds and investment vehicles that are traded in forever-evolving financial markets. There was a time when the trading book and accounting book differed by days or weeks and clients received reports quarterly. This is not acceptable for firms today that are facing the need for complex asset administration and daily reporting cycles. Whether a firm invests in public securities or private assets, each come with their own challenges including underlying exposures, lagged pricing or fair value impacts to elicit and compare to a variety of benchmarks.
Today, managers of all investment strategies are compiling massive amounts of daily data. Fund strategies, client holdings, return results and analytics combine to support actionable information for portfolio managers, investment boards, clients and regulatory bodies. Most asset management organizations that support this daily function call it a middle office, and the platform upon which it relies is best described as a Performance Book of Record (PBOR). This paper outlines why developing a reliable PBOR is essential for next-level growth of your investment management organization – growth driven by data and confidence from knowing your organization is taking advantage of all the informational assets it possesses.

by Richard E. Mailhos, Principal

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Risk Statistics in Performance Calculators: Suitable and Scalable? – Part 2

Investment performance calculators have witnessed steady growth in functionality during the past couple of decades. Leveraging huge data management platforms that contain exception management and workflow capabilities, calculators provide upstream integration capabilities. By expanding calculation breadth to include attribution effects and risk statistics, they are knocking on front office doors. As vendor consolidation occurs and performance systems endeavor to deliver one-stop solutions, it is important to understand design mechanisms related to each functionality that drives system efficiencies. In this paper, we examine returns and ex-post risk statistics.

Refer to Part 1 of this two-part series which lists the subset of risk statistics with which we are concerned and the benefits of calculating these in a performance calculator.

This Part 2 delves into systemic factors that enable efficient computation of risk statistics and why conventional architectures encounter scaling issues.

by Jose R. Michaelraj, CIPM, Senior Consultant

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Risk Statistics in Performance Calculators: Suitable and Scalable? – Part 1

Investment performance calculators have witnessed steady growth in functionality during the past couple of decades. Leveraging huge data management platforms that contain exception management and workflow capabilities, calculators provide upstream integration capabilities. By expanding calculation breadth to include attribution effects and risk statistics, they are knocking on front office doors. As vendor consolidation occurs and performance systems endeavor to deliver one-stop solutions, it is important to understand design mechanisms related to each functionality that drives system efficiencies. In this paper, we examine returns and ex-post risk statistics.

This Part 1 of a two-part series lists the subset of risk statistics with which we are concerned and the benefits of calculating these in a performance calculator.

Stay tuned for Part 2 which delves into systemic factors that enable efficient computation of risk statistics and why conventional architectures encounter scaling issues.

by Jose R. Michaelraj, CIPM, Senior Consultant

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Design Thinking: How to Integrate Creativity into Data-Driven Business

The financial services industry has always been required to embrace change, whether it be driven internally to control cost and sustain growth or driven externally to address and leverage market conditions. Given the rapidly evolving technology environment, volatile markets and globalization; companies are searching for ways to more successfully innovate to meet these challenges and take advantage of this environment by offering new products and services. To do this effectively, an organization must be able to understand customer needs, identify viable business and operating models and ensure their offering is technically possible and deliverable within the parameters of their risk profile.

By integrating a design thinking approach, organizations can more effectively consider the outcomes for the end users of their systems and processes. What will their experience be like? How do the systems and processes provide value to them? How do the deliverables solve their pain points and/or business needs?

by Daniel G. Foley, Principal

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Is RPA the Right Solution to Optimize Your Investment Operations?

The use of Robotics Process Automation (RPA) is on the rise across the financial services industry. Investment operations managers are touting the benefits of using this new technology to reduce headcount, reduce errors, and increase through-put – an operations manager’s dream! Meanwhile, other operations managers are finding themselves in a nightmare situation when they’ve implemented this technology resulting in failed projects and money wasted. To achieve the dream and evade the nightmare, managers need to follow a disciplined approach before deciding which direction to take. This paper provides insights into a proven RPA analysis process used to derive a realistic ROI and successful projects.

by Christine (Tina) M. Madel, CFA, Principal

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Hedge Fund and Private Equity: Investment Performance Challenges

Alternative Investments create opportunities for investors, and they present unique operational challenges for investment managers. This paper discusses operational challenges associated with investment performance calculations, specifically as they pertain to hedge funds and private equity included in a multi-asset portfolio. Challenges discussed include late pricing, layered fees, exposure reporting, preliminary and final pricing as well as negative valuations. The pros and costs of several valuation methods are also addressed.

by Laurie J. Hesketh, CIPM, PMP, Managing Director

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Self-Service Client Reporting: Challenges and Considerations

The risks and challenges presented here within are a sample of factors to consider when evaluating self-service reporting functionality. At the outset, providing electronic access to data seems simple. Layering increased data scrutiny by end-users with regulatory expectations that mimic those included on printed, scripted and static reports is complex. Identifying your firm’s specific challenges and charting a course to overcome them is a worthwhile, rewarding endeavor that will improve relationships with your clients. Meradia has a long history of helping clients with reporting challenges – including self-service reporting.

by Laurie J. Hesketh, CIPM, PMP, Managing Director

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Multi-Asset Class Investing: Part 3 – Knitting Together an Attribution

Meradia has observed a strong uptick in activity around Multi-Asset Class (MAC) investment products and strategies. We see managers across the globe expanding current MAC offerings and introducing new ones; consequently, generating demand for new support around analytic methodologies, data, and technology.

This series explores our view of the multi-asset class phenomenon in depth, from origins to solutions. In our first installment, we looked at market and industry trends that seem to be driving the evolution of MAC toward more sophisticated strategies. In the second, we examined characteristics and methods of MAC managers that raise the bar, relative to traditional investment processes. In our final entry, we’ll examine some real-world solutions to the puzzle presented by attribution in a MAC framework. Given the inherent – indeed, intentional – disparity among the factors driving risk and return of these classes, how do we design and present an attribution methodology that accurately and meaningfully illustrates the manager’s MAC process?

by Mark R. David, CFA, Director of Performance, Risk & Analytics

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Multi-Asset Class Investing: Part 2 – Meeting the Process Challenge

Meradia has observed a strong uptick in activity around Multi-Asset Class (MAC) investment products and strategies. We see managers across the globe expanding current MAC offerings and introducing new ones; consequently, generating demand for new support around analytic methodologies, data, and technology.

This series explores our view of the MAC phenomenon in depth, from origins to solutions. In our first of three installments, we looked at market and industry trends that seem to be driving the evolution of MAC toward more sophisticated strategies and methods. In this second installment, we examine the MAC investment process itself: What are the methods and practices that successful MAC managers employ, and how do these distinguish MAC from more traditional approaches?

by Mark R. David, CFA, Director of Performance, Risk & Analytics

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Multi-Asset Class Investing: Part 1 – Forces Behind a Trend

Meradia has observed a strong uptick in activity around Multi-Asset Class (MAC) investment products and strategies. We see managers across the globe expanding current MAC offerings and introducing new ones; consequently, generating demand for new support around analytic methodologies, data, and technology.

This series explores our view of the MAC phenomenon in depth, from origins to solutions. In this first of three installments, we look at market and industry trends that seem to be driving the evolution of MAC towards more sophisticated strategies and methods.

by Mark R. David, CFA, Director of Performance, Risk & Analytics

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