Investment professionals - RIAs and Asset Managers alike - must constantly find ways to differentiate and offer deeper level of insight into portfolio construction, including risk and return drivers and trade-offs, volatility, sensitivity analysis, correlations, and other quantitative factors.
An article published recently on FT.com detailed the rise in use of ETFs as an alternative to actively managed (or passively managed) Mutual Funds. The piece, ETFs are Eating the Stock Market, notes that the reasons investors choose ETFs over Mutual Funds are well understood, and can be summarized as broad investment allocation across segments with low fees. The article goes on to surmise that ETFs are here to stay, even with a presumed turnaround in active management in 2017. So for those firms selecting ETFs as a quick and easy way to gain exposure to a specific segment, what might be the overall impact on your portfolio, and how can you prepare for the potential of hidden (and unintended) risks?
Today’s blog post summarizes how BISAM collaborated with the performance team and their front office counterparts at a large global insurance firm to deliver a robust performance and attribution platform for complex data management, performance measurement, reporting and multi-asset attribution. The resulting solution enabled the performance team and portfolio managers to evaluate and enhance their investment strategies, while maintaining high levels of security, transparency, process control and operational scale.
In their November 2016 post-election analysis, Is the Recent Market Rally Indeed Small Caps Driven, our BISAM Quant team noted that, “despite the media expectations of a swift market crash following the U.S. presidential elections on November 8, 2016, the markets actually continued going up significantly.” Since then, our team has kept an eye on the Cognity Daily Risk Statistics, which visualize Normal vs. Fat-Tail VaR spreads.* As of today, it would seem that the spreads have remained fairly flat across both the Russell 2000 and S&P 500 - a signal of ongoing optimism in the current market regime.
In 2016, BISAM launched a new scalability initiative to ensure that as our customers’ processes evolve and their businesses grow, they can confidently rely on B-One to scale with them. We now have a proven process in place to ensure a continuous path of progress so that our customers can successfully scale their operations with their business. Following is an at-a-glance summary that looks at how BISAM’s B-One development team partnered with two particular customers to help them achieve vastly improved operations, processing and response times. You can download the detailed case study via the button below.
Topics: Support & Implementation
As head of account management for BISAM’s Cognity risk customers, I am pleased to share this Cognity customer success story, which looks at how the Head of Risk at one of our asset management customers leveraged Cognity to regain compliance with UCITS requirements around VaR exceedances. Prior to consulting the BISAM Cognity team, the customer was using a risk model and risk platform that was not able to provide accurate risk estimates within two multi-asset, multi-currency funds. As a result, the customer saw more than 20 Value at Risk (VaR) exceedances in one year. Looking for more accurate measures, the customer turned to our Quant team and the Cognity platform, which proved to provide a clearer lens into the firm’s portfolio risk, utilizing our open and transparent “real world” risk modeling approach that understands the structure of financial asset distributions and adapts to all markets regimes. Following is a summary of the customer’s challenges and the Cognity solution that helped them to regain confidence in their approach, and instill trust with their board and regulators.
Topics: Risk Management
In 2016, the BISAM Professional Services team launched its Future State Initiative, a project dedicated solely to continuously improving and advancing the implementation process through the development of an implementation toolkit comprised of best practices and frameworks. This initiative has empowered the Professional Services team in their ongoing efforts to steadily reduce costs, increase efficiency, and improve consistency of BISAM solution implementations. Following is a summary of the initiative, as outlined by Tamara Palamakumbura. Tamara manages BISAM's UK and Northern European implementation team, and has expertly led the Future State Initiative for BISAM.
Topics: Support & Implementation
’Tis the season for year-end reflection, so drawing inspiration from last week’s farewell post by Peter Ellis, I asked several of our regular BISAM blog contributors to share what they deemed to be the biggest surprises of 2016, and their predictions and recommendations for 2017. To be sure, Bloomberg’s announced acquisition of Barclays POINT and this year’s geopolitical landscape - from Brexit to multiple global elections - reigned as the biggest surprises of 2016. The impact of these events remains to be seen as we move into 2017, but will undoubtedly increase demand from investors, regulators and internal stakeholders when it comes to portfolio analytics and the need for ever-more innovation in the ways that firms approach, manage and report on performance and risk. To that end, here are some final thoughts for the year from our BISAM Insights team…
Topics: Market Trends
A couple of months ago, Peter Ellis, renowned PMAR expert and valued advisor to BISAM, took the decision to retire at the end of this year. Or as he put it, “it’s more of a semi-retirement, as I will continue to advise the industry here and there.” We will miss Peter’s insights and contributions, but we are pleased for him and wish him well on his adventures in retirement. In the following post, Peter reflects on his time at BISAM and the ever-evolving performance and risk industry, and offers words of encouragement for the future. I hope you enjoy reading it as much as I did. And now, here's Peter...
The added value of performance and risk analysis continues to be realized across the value chain, not only by asset managers, but also their clients. As a result, the buy-side is under far more pressure to deliver more and differentiated result sets to their investors, with transparency into the correlation between investment risk and portfolio performance. And while the unification of performance and risk is not a new idea, its practical application is still a work in progress for many firms. So what does integration mean for investment decision-making, risk analysis and performance reporting, and how should firms evolve their systems, processes and teams to adapt?