An appetite for alternatives

Asset classes

Hunger for higher returns continues to drive interest in alternative investments.

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Feasting on alternatives

With the market for traditional asset classes offering low interest rates and low yield at best, the appetite for Alternative Investments continues to soar. This has not gone unnoticed by investment managers, with around 70% of them investing in alternatives. This is the fastest growing category of investments, doubling in size since 2005 and expected to double again by 2020 to reach US$18 trillion. Investment managers are diversifying more and more within the alternative asset class, but infrastructure, private debt, private equity, and real estate remain the asset classes growing the fastest.

Adopting a new asset class directly impacts the need for better software coverage. The bigger the alternative asset portfolio, the higher the need for system stability in the core daily operations. This call for more automation and more integration around corporatewide functions such as risk, compliance, accounting, and settlement. With alternative assets growing, there will be more and more regulations that investment managers have to comply with, which adds further to the pressure on system requirements.

To efficiently handle their growing alternative investment operations, Investment managers increasingly request simplified IT system architectures with reduced number of systems and technologies, thereby reducing the number of interfaces that can generate excessive delays in the information flow.

As investment managers’ prioritization of alternatives increases, SimCorp is dedicated to providing the stable system support for best practices operations needed in this field. Already today SimCorp Dimension is able to support investments in alternatives in different way. However, as this is a need, which is expected to continue growing, SimCorp is also building a new dedicated manager for alternatives, completely integrated with SimCorp Dimension’s core and the robust system features. The improvement of SimCorp Dimension’s functional coverage of the alternative investments, with market standard and best practices, and all integrated with the system’s cross-asset IBOR and ABOR, will tremendously help clients’ front to back handling of alternatives.

Will Trout, Head of Wealth Management Research, Celent, explains the benefits of integrating your alternative assets on a consolidated platform.

Alternative Investments

Hugues Chabanis, Product Manager for Alternative Investments

Hugues has extensive industry experience within alternative asset software, from buy-side to vendor side, having held positions across consulting, sales, and product management. He joined SimCorp in 2015 to help strengthen SimCorp’s roadmap and support of alternative asset classes.