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Non-Core Technologies for Asset Managers Differentiate and Improve your Business Richard Waddington, TradeTech Singapore 2015
| Date post: | 21-Jan-2017 |
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Non-Core Technologies for Asset Managers
Differentiate and Improve your Business
Richard Waddington, TradeTech Singapore 2015
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These funds both have 19.7% annual RoR
AUM 2.2Bn USD AUM 120m
Page | 3
The Progress of Process
Driven by Technology ……. And the Division of Labour
Page | 4
Originally this meant one person was more
efficient if they just did one job..
Page | 5
It really means the most efficient way to use
your mix of resources:
ISO 8373 defines collaborative operation for robots!
Page | 6
Ignoring Process in Consolidating Markets
Page | 7
The Timescales are a bit different..
Page | 8
…..but the Story is the same
HF: As of 2014, 2.7 TN USD under management..
Huge capital inflows..
16bn into equity strategies alone in Q1 2014
Its all going into larger funds..
Globally 1000 funds launched in 2013 (lowest
number for 4 yrs).. >1200+ ceased
Source: HFR/ EurekaHedge
Number of US Car Manufacturers 1865- 2010
Number of Funds >50m USD AUM, 2001-2014 Successful asset managers will win with clearly differentiated value propositions, rather than relative
outperformance.
Page | 9
Create that Value Proposition Through I.T.
6 Dimensions of Technology in Business
ALPHA/ R&D
CLIENT (CRM) & BRAND
VALUE CHAIN SCM/ ERP
EXECUTION
OPERATIONS
RISK/COMPLIANCE
Page | 10
The 6 Dimensions of Industrial Technology
**These Technologies become part of the Client Brand Perception
Dimension Manifestation How Long?
R&D** New Product Features 100 years
Execution Assembly Lines 100 years
Control Less Scrap & Compliance 50 years
Finance/Operations Efficient Processes 50 years
Supply Chain/ERP Internal/External Transparency
Planning and True Costs Analysis Steel-Mill to Showroom
20 years Since the Internet
Clients Relationship** Interacting with, Influencing and Tracking Customer Habits, & Creating Communities
Page | 11
Fund IT is used for Managing Relationships
ALPHA/ R&D
VALUE CHAIN EXECUTION
OPERATIONS
COMPLIANCE
The 6 Dimensions of Technology
CLIENT /BRAND
Operations/
Risk
Investors
&
Allocators GPs/
Owner
PMs
Traders
Brokers
Regulators
The
Market
Sales
Administrator
Fund Co. Data
Page | 12
6 Dimensions in Fund Management Tech
Technology Area Purpose
Driver or Metric
Core Non-Core Champion
R&D Search for Alpha Hit Rate PM Core PMs
Plant Execution Lower TC Trader Core
Traders
Control Compliance Regulators No
Choice! Owners/L&C
Finance/Ops Transaction Efficiency
Lower Costs, Less Errors
Fund Co. Core
Owners/Ops
Supply Chain ERP
Manage Data Use Resources
Business Efficiency
Non-Core Owners
Client Relationships
Raise & Retain AUM
Why We Exist Non-Core All
Page | 13
Type 1(Core) vs Type 2 (Non-Core)
Core Technologies Manage
Relationships
Non-Core Technologies Enhance
Relationships
Page | 14
Where does Non-Core IT benefit? Look at what people are doing: Tasks have Inputs and Outputs
Input /Output Simple Complex
Defined
UnDefined
Page | 15
Examples
Input /Output Simple Complex
Defined
UnDefined
Switch on a light Build a bridge
Identify my Mum Run the country
Page | 16
Non-Core is here:
Input /Output Simple Complex
Defined
UnDefined
OMS/EMS/PMS Non-Core
PM’s Asset Selection Best Avoided
Page | 17
Which Processes fit this in Fund Management? Repeatable Actions with defined inputs and complex
calculations leading to defined outputs
Portfolio Construction
Data Management
Attribution/Risk Analytics
Enhanced Client Communications
Value Added Post Trade Processes
These a can all be
performed by SaaS
providers without
touching either your
PM’s Asset selection
uniqueness, or your
Core IT systems.
Cheap, SaaS, Low Risk,
Additive, Differentiator
Page | 18
Map These around the Business
Investors &
Allocators
GPs/
Owner
PMs
Traders Sales
Data
Sales and CRM
Processes
ERP and Data
Management
P&L Analysis
& Attribution
Portfolio
Construction
Data
Management
Portfolio
Construction
Administrator
Broker
Funding
and B/S
usage
Client Data
Comms
Operations/
Risk
Page | 19
Example: ORS Portfolio Construction The PM looks down this list when making decisions
PORTFOLIO MANAGER VIEW 1 Asset Selection 6 2 Conviction 5 3 Risk Limits 4 4 Gross Exposure Limits 3 5 Sector Exposures 2 6 Factor Exposures 1 INVESTOR/CIO VIEW
The Investor or CIO looks up this list when making decisions
These Type-2 Non Core Technologies all
enhance what your team does.
ORS provides a framework that unites these very different views.
The PM‘s decisions and convictions are traded consistently with the requirements
defined by the Investor/CIO.
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Non-Core Technologies Enhance your Business
They make your team better at what they do
There are barriers to Uptake:
Management Bandwidth to assess value
Teamwork: who is the decision maker in a Fund Co?
Self-Knowledge: go beyond ego
Implementation Worries: These ideas must be introduced as
non-core & low risk.
Page | 21
Use Type-2 Non-Core IT to enhance your
Team’s capabilities
Identify process gaps and allow
the Robot to work with you! It
will help your business grow.
Contact us for more info:
Richard Waddington
www.SherpaFundsTech.com
