Tech demand increases as investment complexity rises

fintech technologyTechnology to support private equity investments and other alternatives appears set to become critically important, a survey into asset management technology suggests.

Not only do 82% of institutional investors tell the technology survey that investment management strategies are becoming much more complex, but most also say private markets investments are of “highest importance” among alternative investments, more so than hedge funds.

According to Milestone Group, a technology firm that carried out the survey of 47 institutional asset allocators, allocators often lack the tools to efficiently manage complex strategies.

Many critical functions continue to rely on spreadsheets and “aging technologies that are reaching the end of their useful lifecycle”, said Randal McGathey, a specialist in asset allocation solutions at the firm.

Milestone’s ‘Asset Allocation Technology Survey 2020’, which looks at current and future technology requirements of asset owners and investment managers, also found:

  • 50% of firms use four or more systems for monitoring portfolio exposures
  • Some firms are using as many as 13 different systems/providers across all investment functions
  • Half of all respondents indicated that their current technology profile is comprised of multiple legacy systems and spreadsheets
  • A quarter of respondents are still using spreadsheets to manage critical functions such as monitoring portfolio exposures.

McGathey said: “The impact of asset allocation on outcomes is well recognised and institutional allocators continue to be both propelled and constrained by the complexity of their work.  The report finds that current state technology is highly fragmented across the front and middle offices.”

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