Cloud Looms over Portfolio Management Software

For fund managers, financial advisers, and Registered Investment Advisors, getting a holistic view of the risk/reward value of all the assets under management has not been easy.  A great deal of the portfolio management software currently available is still somewhat “clunky”: customized spreadsheets cobbled-together with various specialized programs, some of which depend on data uploaded from public sources.

“In the past most portfolio management software has largely been accountant-driven,” explains Daniel Rotherford, investment fund officer at Legal & General Unit Trust. “But fund managers gain immensely from a global view what is happening throughout their holdings. This is now much easier to achieve with software based in the Cloud.”

“We want to get all of our fund administrators onto a single platform,” says Tim Pearey, COO of Odey Asset Management, “And the Cloud-based approach enables us to do that.” 

This holistic approach to portfolio management is becoming possible, now that a number of providers have innovative Cloud-based offerings for portfolio analysis and management.  These new offerings are agile – they allow a vast amount of different functionalities across the single platform. They are Web-based, and thus, easier to access.  But they offer deep functionalities and broad integration, on a user-friendly display.  This makes them accessible to a small advisory firm, or to a global fund manager.

Increased regulation is another driver for this growing market.  Regulations around risk reporting, liquidity and investments in derivatives are still a cause of concern for most buy-side firms. Often, technologies are siloed which adds complexity when assembling accurate, holistic risk reports to meet regulations according to the standards in performance reporting for investment management firms,

According to a recent CEB TowerGroup study, the demand for portfolio-management software is rising at the rate of about 8 per cent to 10 per cent annually. A Cap Gemini-study estimates that the global market is worth $2.4 billion per year.

But Cloud-based applications are beginning to take an important share of this burgeoning market. “The [Cap Gemini] study shows that there has been a marked increase of demand from buyside firms, whereas previously the sellside ones had been the main market for this kind of software. The top three factors driving the buy side to invest: boosting performance amidst pressure from index funds and ETFs, pressure from regulators and compliance, and better risk management. Further demand will be driven, in 2013 and 2014, as more buy-side firms will hire chief risk officers who will invest in new risk management technology that until now was used more on the sell-side.

The London based firm StatPro provides a good example of this kind of new Cloud-based software for portfolio analysis. “StatPro Revolution offers a complete, interactive and cost-effective online solution for portfolio analysis all in the same place.

“With a considerable selection of easy-to-use analytical tools and the ability to share portfolios with colleagues and clients, StatPro makes  the best use of the Cloud,” explains StatPro Group CEO Justin Wheatley. “Sharing interactive analysis increases our clients’ efficiency and transparency, enhances their client service, and builds trust. Every portfolio is a network, so being able to share interactive analysis in a controlled manner gives StatPro Revolution clients an advantage over others when communicating about performance and risk to stakeholders in their network.”

This centralized process enables quick yet controlled distribution of cloud-based portfolio analytics. Such control enables rapid deployment of business information to any user with a full audit trail and without the hassle and expense of managing local applications.

Another advantage of the Cloud-based approach is that it makes importing data and making data available on a corporate-wide basis very easy. Data is shared, but in a controlled way, with security levels and with safeguards.

Users say that the approach has considerable appeal. Says Stanley Kumalo, chief integration officer at Momentum Investments: “StatPro Revolution is truly ground-breaking in that it is a comprehensive cloud-based portfolio analytics solution bringing substantial benefits to our business as a whole. StatPro Revolution provides us with centralized control and management, and limitless distribution capabilities across all spheres of our business, thereby ensuring that our analytics data is available dynamically to all those business functions that require it.”

Another Cloud-based portfolio management offer comes from the Windsor, Connecticut-based SS&C software. The American company provides secure and audited cloud environments with an offer of SLAs that target investment  managers, Like StatPro, SS&C uses the Cloud to achieve operational efficiencies and multi-user access. The Web-based platform also offers a user-friendly display. SS&C’s PortPro platform is also targets bond investors’ accounting and analytics needs.

Another American firm, the Seattle-based Tamarac, offers a Cloud-based, integrated portfolio management platform. Specifically targeted to Registered Investment Advisors (RIAs), the Tamarac platform makes use of technology that tightly integrates portfolio management, CRM, trading and other core investment processes, RIAs and others in the investment-management business gain enterprise-class functionality that gives them more time to serve clients and fuel growth.

There are some worries among potential users about the use of the Cloud in investment management. Some consultants cite issues about security as a number of companies share the same platform. There are also concerns cited about training, because, although the Cloud-based Web displays are easy to use, many in the industry have very limited computer literacy.

But providers say that these are all issues that are being addressed. “With nearly 20 years of experience and expertise, we believe analytics should be sophisticated yet simple and useful as well as secure,” StatPro’s Wheatley insists.