Most global institutional investors don’t have the technological capability to adopt sophisticated investment strategies, according to a survey by US financial technology firm Milestone Group.
Some 82% of the 47 institutional investors the company polled in the third quarter said investment strategies are becoming more complex. Half the respondents said they use four or more systems to measure portfolio performance.
Most asset owners still rely on legacy technologies, Randal McGathey, vice president of Milestone, says in an interview with Asia Asset Management (AAM).
A plurality of respondents either currently have, or prefer to have a built-for-purpose institutional asset allocation investment management platform…The current technology is highly fragmented across the front and middle offices,” he says.
Within Asia Pacific, portfolio management technology is being driven by what’s becoming an insourcing trend among top pension funds, according to Milestone Asia Pacific Managing Director Marian Azer.
For example, she says there’s growing demand from Australian superannuation funds for a comprehensive platform to monitor daily market information, especially since they started taking back previously outsourced asset management tasks over the past decade.
She says many of these funds now have well-developed internal investment teams and their own chief investment officers. Some adopt a hybrid model with a combination of internally and externally managed investments.
But most technology solutions in the market cannot fully support the increasingly complex asset management structure and asset allocation of institutional investors, especially for sophisticated alternative investment strategies.
This will be the driving force for the development of portfolio management systems in transparency and operational control,” Ms. Azer tells AAM.
Boston-based Milestone is a provider of technology and software solutions to asset managers and pension funds globally.