Asset class expansion, operational efficiency, and outsourcing lead the list of innovative ways firms are getting – and staying – ahead of the competition
In their 2024 Investment Management Outlook, research firm Deloitte reports what many investment firms already know: even though some asset classes performed better than others last year, overall industry performance across asset classes remained subdued, driven by various economic and industry pressures.
Since current revenue models are tied to assets under management (AUM), revenues at many investment firms are also expected to drop this year.
With this revenue pressure, Deloitte predicts that spending on technology is not expected to increase significantly this year.
However, Deloitte’s research notes that this market dynamic means that firms that do invest in technology can set themselves apart from other firms—provided the technical investment leads to enhanced performance and delighted investors.
In this blog post, I honor the work of 5 Investment firms we’ve spoken to recently that have done just that: By combining their investment strategies with technology and outsourcing, they are seamlessly executing their investment ideas to keep ahead of the competition.
Here’s how they do it:
Streamlining Operations Across Asset Classes
As many firms have learned, expansion into new asset classes can lead to new opportunities. However, if those asset classes introduce new labor-intensive processes, the increased operational risk and costs may outweigh performance improvement.
So, when it comes to asset class expansion, the firms I admire the most are the ones that ask two critical questions: Is the asset class attractive, and do we have the technology to support it?
Take a close look at Bardin Hill Investment Partners, a credit-focused investment management firm. They successfully streamlined operations across instruments by incorporating SS&C Eze’s OMS technology, allowing them to consolidate their entire enterprise on a single cross-asset platform.
Today, the firm relies on the OMS to streamline operations across equities, performing credit, opportunistic credit, litigation finance, UCITS/40 Act, and private equity vehicles.
As Jatish Panji, V.P. of Information Technology at Bardin Hill, put it, “SS&C’s Eze OMS stands out with its ability to handle all investment types and asset classes across the enterprise, bolstered by robust security profiling, compliance checks and P&L reporting. Our fixed income team has been very happy with the improvements to their trading workflows and overall efficiency.”
Bardin Hill also uses SS&C Geneva for fund accounting. It relies on the integration between Eze OMS and Geneva to enable the firm’s trade data to flow seamlessly to the accounting platform and then downstream to the required third parties.
Launching ETFs with a Front-to-Back Workflow
Though Exchange-Traded Funds (ETFs) have been around for a while, Deloitte’s research finds that ETFs remain one of the main drivers of innovation in the investment management industry. In 2023, there was rapid growth in actively managed ETFs.
I’ve seen this growth firsthand among many of our clients. Early this year, Harbor Capital Advisors launched its first internally managed ETF, the Harbor Multi-Asset Explorer ETF. The ETF provides investors with exposure to broad asset classes, such as equities, fixed-income securities of any credit quality, real estate investment trusts, commodities, and cash and cash equivalents.
To seamlessly integrate workflows across the Harbor Multi-Asset Explorer ETF’s operation, they choose SS&C’s investment management platform. The platform includes Eze OMS for trading. Harbor Capital has also upgraded to a seamless front-to-back solution with the addition of SS&C Geneva for fund accounting and daily operational support for certain ETFs.
The offering tightly links Harbor’s front, middle, and back offices with a unified data set and in-depth capabilities.
As Kristof Gleich, President and Chief Investment Officer, shared in this press release, “We wanted to be able to manage all workflows with a single vendor. SS&C’s front-to-back solution stood out with the ability to provide a daily NAV close, compliance support, and interoperability with in-house and third-party systems.”
Optimizing Investment Operations
One key takeaway from the Deloitte research was the role technology plays in supporting internal efficiency goals and meeting client expectations.
As one London–based global investment firm outlined the requirements of its next investment system, it was clear that the team was keenly aware of those demands. They wanted technology that could streamline their operations and scale their business.
The firm chose Eze Eclipse because it gave them the robust trading platform they needed in just six weeks while generating data to help them better understand and capitalize on where they are creating alpha.
Like many others, this firm is strategically transitioning from a physical infrastructure to a cloud-based tech stack. Eze Eclipse's cloud-native architecture aligns perfectly with this goal, enabling firms to maintain a lean team without compromising efficiency.
Harnessing New Business Opportunities
In addition to optimizing operations, many of the firms I work with are looking for new business opportunities to position their firms for success – and relying on technology to help capture this business and keep clients satisfied.
For example, Applied Finance Capital Management uncovered a new business opportunity in the form of an Asian pension fund. But before the fund could commit, Applied Finance needed to assure it that it could fulfill all its operational and technological requirements, along with the fund's strict security demands.
While some firms may have missed out on the pension fund opportunity, Applied Finance dug in. It set out to find technology to support the fund's demands and get the team up and running quickly enough to secure the new client.
"When a former colleague I trust and respect said that Eze Eclipse was fast and amazingly easy to implement, I was immediately on board,” says John McErlean, Director of Trading at Applied Finance. “Eclipse is the latest in investment management technology. Because it is a cloud-based application, it was essentially plug-and-play.”
John says that Eclipse’s ease of installation reduced the ramp-up time, which was critical for helping the firm capture this business.
Growing with Strategic Outsourcing
Successful firms find ways to maximize their resources in challenging times. For many firms, that means outsourcing some or all of their business functions.
Research supports this strategy. Lower headcounts and the range of outsourcing solutions available today enable investment managers to get their firms up and running more efficiently, reduce costs, and reach their breakeven point more quickly.
Jonathan Goldberg, Chief Investment Officer at Hallstatt Advisors, an equity-only hedge fund, chooses to outsource the operation's critical functions to minimize overhead and headcount costs and help better respond to a rapidly changing market.
Hallstatt found that outsourcing investment technology to Eze Eclipse's modern, cloud-native architecture was just what their fund needed to meet its needs today – and in the future.
"With Eclipse, you can turn on the system and meet your basic needs day-to-day without a major headache. As your needs change, you do not have to reinvent the wheel; the technology can expand with you," says Goldberg.
Like other hedge fund leaders, Jonathan also believes service is critical to outsourcing success. He says there are key advantages to working with people who live and breathe the technology and are up to date not just on what the technology can do but also on how it can help navigate the industry's challenges and opportunities.
"The rapid pace of change in our industry means you want to talk to a person who, day in and day out, is working with customers and knows the technology and the industry," concludes Jonathan.
Celebrating Investment Firm Innovation – Today and Every Day
While the industry continues to be challenging, it is gratifying to see SS&C technology users not only survive but thrive.
I admire the work of these users and users like them who are adapting to the challenges of today’s markets, and I am proud of the role SS&C technology and service play in supporting these efforts.
While we don’t know what the future might hold, one thing remains clear: as firms seek opportunities, investment managers' ingenuity will always set them apart from the competition. We are proud to provide the solutions and services that support that effort.
