Financial markets are buzzing with urgency as players rush to add variety to their investment strategies. With market unpredictability on the rise, investor expectations constantly evolving, geopolitical challenges looming, and regulatory oversight intensifying, relying solely on equities or single asset classes is no longer a comfy choice.
If we look at Hedge Fund Research data, you’ll see a significant shift from 2015 to 2023: hedge funds focusing solely on equities have dwindled from 60% to 45%. Meanwhile, Barclay Hedge reported a jump in multi-strategy funds from 20% in 2010 to over 35% in 2022. Clearly, the landscape of market participants is reshaping, with more managers turning to external help. They sense the solution but are unsure how to phrase it effectively.
The topic of adapting to a multi-asset fund environment was tackled head-on at the recent InvestOps conference in London, during a panel called “Servicing Multi-Asset Funds.” Key voices like Marcela Crossman, SS&C’s head of middle office outsourcing, joined forces with Ryan Atkinson from Intermediate Capital Group and Matthew Goldblatt from J.P. Morgan to sketch out a path forward for the industry.
A big question was thrown at the panel: does the shift toward diverse portfolios mean managers must completely revamp their operations? A member of the panel suggested that legacy systems, designed for simpler times of equities and single assets, just don’t cut it anymore.
“You could attempt to transition to handling multiple complex assets with your old setup, but it’d be like dragging a boulder up a hill—slow, manual, costly. That’s why tech is becoming the go-to solution,” Marcela noted.
In the past, overhauling systems was a monstrous task—expensive and disruptive. Yet, one panelist urged that rather than a giant leap, a series of smaller, focused steps toward modernization could bridge the gap without overwhelming managers.
They dove into the significance of integrating data, asset classes, and processes. Marcela pointed out that before diving into integration, managers must prioritize data quality—an awareness that’s catching on across the board.
“To automate processes or leverage AI effectively, you need a rock-solid data foundation. Firms must sort their data out before even thinking about AI and robotics,” Marcela advised.
The discussion highlighted the vast effort required to secure, clean, categorize, and manage data for a multi-class investor, driving many managers towards expert partners for help.
Even though tech is vital, the unanimous sentiment was that data is the linchpin of modern business—shaping technology and being unified on a singular platform is crucial.
“A centralized data management platform brings all your data into one cohesive format, ensuring uniformity across asset classes. Outsourcing the operational bits that aren’t core to your strategic focus is the best bet; it ensures data quality while letting a pro handle it,” Marcela explained.
The panel also scrutinized the traditional approach of deploying specific tech pieces for distinct purposes, noting it can fall short by overlooking the core issue of integration. Fragmented systems might offer short-term solutions but could complicate integration over time.
“At SS&C, having proprietary, inter-operable tech means every solution we roll out operates cohesively, no matter how far a client ventures into modernization,” Marcela emphasized.
She also doled out advice on outsourcing strategy: “Offload the routine, non-essential operations. This taps into specialized expertise while conserving your internal teams for core pursuits. Retain control over your operations and the data driving them, but stay focused on your main goal—achieving Alpha.”
For those interested in tech solutions for hedge funds, more insights can be found in our “Transforming Hedge Fund Operations” brochure.
