Balancing Art and Science: Returns & Benchmarking Processing for Asset Owners

In the first paper of our asset owner series, we explored the unique business drivers, valuation methodologies, and considerations for private market and external manager processing. Now, in our second installment, we shift our focus to returns and benchmarks.
Asset owners often invest across a diverse mix of private and public market asset classes. But should the same return methodology be applied to both the asset class and the total fund level? Are there acceptable deviations?
Sophisticated benchmarking capabilities are essential for accurately consolidating returns at the total fund level. The complexities of substitution and benchmark specific overrides present challenges driven by various underlying factors. What are these factors, and how can best practices help overcome these challenges? Read on to discover our perspectives and practical solutions

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Competitive Edge and Business Value Begins With Data Quality

The strategic importance of maintaining high data quality in asset management is pivotal, given the industry’s reliance on precise and timely information for decision-making, regulatory compliance, and client satisfaction. In this article, we explore the crucial role of data quality in various facets of asset management. Getting data quality right enhances operational efficiency, fortifies client

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Cash Drag or Collateral-Derived Alpha: The Choice Is Yours

Generating alpha is hard enough, so why let cash drag stifle returns?  With derivative-laden portfolios in a high-interest rate environment, collateral presents opportunity to improve returns.  The decade-long period of low-interest rates created detrimental habits with a default cash collateral model. Asset owners face challenges in diversifying collateral beyond cash due to existing infrastructure that

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Charting the Course: Enhancing Performance Through Effective Private Market and External Manager Practices

Asset Owners¹ play a pivotal role in the institutional side of the investment landscape, utilizing capital markets to fulfill the long-term needs of beneficiaries. Their objectives are intricately tied to liquidity requirements and investment horizons, overseen by stakeholders such as Boards, Trustees, and Investment Committees. Given the diverse asset classes involved, a blend of internal

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Secrets to Successful Data Transformation Strategies

The financial industry is witnessing a transformational ‘tidal wave’ of change, with vendors exerting a gravitational pull on the front office, providing integrated data and applications while asset servicing providers absorb post-trade, middle, and back-office operations. Generative AI, NLP, and machine learning demonstrate near limitless application and use opportunities. Competition for assets and consistency in

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Data Mesh – Investment Industry Trend or Unicorn?

Recently, we attended a financial data industry event and listened to one company after another share their experiences in their data governance and management journey. That day, we learned that only a few had moved forward with a data mesh save for leaders in the industry. Those leaders shared their implementation stories, and we will share this question with you. What came to our minds at the time was whether Data Mesh was a unicorn in the investment industry. Is the self-service data platform a myth or a reality? With that question in mind, we spoke to several firms at the gathering and interviewed others afterward to learn about the data mesh ‘state of the union’ in the investment industry.

by Andrew Jacob, CFA

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Facing the Challenges of Mergers and Acquisitions

With one in six asset managers expected to be acquired or go out of business in the next five years, preparing for M&A activities is crucial for success. It’s important to consider each option’s potential benefits and challenges and to carefully evaluate whether M&A activities align with your firm’s goals and values. However, these processes can have significant challenges, including cost management, personnel, and legal and regulatory issues. Jonathan Boersma, CFA’s latest article, “Facing the Challenges of Mergers and Acquisitions”, explores these challenges and provides considerations for mitigating them.

by Jonathan Boersma, CFA

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Maximizing Value In Asset Management: A Closer Look At Insourced Operations

INVESTMENT OPERATIONS IS AN ASSET, NOT A LIABILITY What is the role of investment operations in asset management? Should asset managers insource, outsource, or use managed services? The decision is a difficult one. Discussions around modern target operating models and how to utilize investment operations have highlighted the benefits of outsourcing middle and back-office functions.

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Reap More Value From Data in Operational Transformations

“SURROUNDED BY DATA, BUT STARVED FOR INSIGHTS.” – JAY BAER LEVERAGE CAPABILITIES AVAILABLE IN EMERGING CONVERSION TOOLS TO SUPPORT PLANNING INSIGHTS In the first paper, we said that Performance is Data, sometimes a daunting data challenge. Performance data generation happens in successive layers. Aggregation of holdings creates exposures; changes in market values or exposures create returns; returns lay

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