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Key challenges SA asset managers face

Jul 07 2017 19:59
Carin Smith

Cape Town - In the information age society has become used to having access to information instantaneously, says Riaan Burger, an investment performance consultant at StatPro.

"Investors are no different and nowadays expect instant access to information on how their investments are doing. Asset managers are facing an increasing demand for more frequent, up-to-date and detailed investment information, not only by investors but financial regulators as well," he explains.

This creates an operational challenge for asset managers, because large volumes of data and complex calculations must be processed with speed and accuracy to provide the expected level of client services and transparency.

Investors want to know how their investments are doing and this is generally measured by the return the investment portfolio generated. However, this single number is the result of an entire investment decision making process followed by the asset manager.

"Investment performance analytics involves quantifying the results of each investment decision made by the asset manager and understanding the different sources that contributed to a portfolio’s return. This analysis is key to determine whether the asset manager was purely lucky with its investment decisions or whether the skills and expertise of the asset manager added any value," says Burger.

The performance of a portfolio goes hand in hand with the level of risk the asset manager takes by making investments. A higher exposure to risky investments should result in higher performance over the long term and vice versa.

Investment risk analytics involves quantifying how much risk the asset manager is taking with its investment decisions and understanding the different sources of risk a portfolio is exposed to. This analysis is key to determine how a portfolio will likely react to different financial market conditions.

Cloud technology trends

The asset management industry has been slow to adopt cloud technology, primarily due to the concerns around data security for financial institutions. However, with the proper tools and levels of data encryption, cloud technology can be more secure than existing on-premise technology, according to Burger.

"Asset managers are starting to realise the benefits and cost savings of moving their technology into the cloud. The processing power, scalability and flexibility of cloud technology provides a compelling reason for more asset managers to move their technology into the cloud to address their operational need to handle large volumes of data with speed," he concludes.

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asset management  |  investments  |  money

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