Portfolio complexity increasing in fiduciary management

Portfolio complexity is increasing, according to a survey of the fiduciary management and outsourced investment professional industries.

The survey, commissioned by fintech company Milestone, found that increasing portfolio complexity is primarily being driven by competition in the market.

Portfolio complexity also looks set to increase, the survey found, with a majority of respondents saying that they expect the complexity of their portfolios to continue to grow.

In addition the survey found that:
      •   A more diversified investment portfolio means operational complexity, leaving managers to have to address operational control and efficiency challenges across their businesses, while carefully balancing investment risk and return. 
      •   Survey respondents outlined that technology is essential to managing this operational risk.
      •   89% expect that the outsourced CIO market will continue to increase in size
      •   89% of respondents expect increasing pressure on margins over the next 5 years
      •   83% of respondents indicated their firms’ use of alternative assets, such as private equity and real estate, is increasing
      •   64% of respondents reported that between 81-100% of their solutions are customized
      •   All respondents indicated that technology is critically or significantly important to controlling operating risk

Paul Roberts, Milestone Group chief executive, said: “The findings of the survey reveal a number of insights into the challenges and opportunities facing outsourced CIOs.

“Some of these seem to correlate with a normal market development and maturation cycle, such as margin pressure and increased use of technology to support scale; while others seem more tightly coupled to the nature of the outsourced CIO business itself, such as levels of alternative asset usage and customisation.” 

The number of respondents to the survey was not disclosed.

©2018 funds europe

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