Multi-Asset Portfolio Systems: The Buy-Side's New Pied Piper

Boston, MA - 20 August , 2007

The global portfolio systems market is expected to experience an annualized growth rate of 2.8%, and could reach US$2.67 billion by year-end 2010.

A new Impact Report from Aite Group, LLC discusses the buy-side portfolio systems technology market and the entrance of several cross-over vendors from the banking, brokerage and treasury sectors. Hedge fund growth, the need for risk controls and proper valuation, and the increasing use of derivative instruments across a broader population of investment managers, are altering the development queue for portfolio systems. Multi-asset portfolio systems — those with the ability to process all types of assets including non-listed exotic instruments — are now attracting greater interest from buyers.

The global portfolio systems market, which supports all types of asset management firms, reached approximately US$2.32 billion as of year-end 2006, and is expected to reach US$2.67 billion by year-end 2010, representing an annualized growth rate of 2.8%.

There is only a select group of technology vendors today handling all instrument types with an integrated suite that offers support in areas such as advanced derivative processing, risk analytics, yield curve analysis, instrument valuation, and collateral management. Over the last few years, studies have shown that investment managers prefer to use fewer vendors, making the integrated front-to-back suite ideal. The suite concept supports future firm growth; should additional needs arise managers may add to their infrastructure on an as-needed basis.

"Even if buy-side firms are not currently engaged in a high volume of OTC trades, they are aware that further down the road, a change may take hold. To that end, buy-side firms are querying technology vendors on the solution's ability to process these instruments today and in the future," says Denise Valentine, senior analyst at Aite Group and author of this report. "We anticipate eventual convergence of traditional and multi-asset portfolio systems. At the moment, however, the vendors in the report provide an integrated multi-asset portfolio suite with a range of features and functionality not available elsewhere. This means they will stay in the limelight for at least a few more years."

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