What do you do?
On paper, I look after our alternative strategy, which in English actually means I am a bit of a hybrid. Typically, I spend most of my time talking to chief investment officers and chief operating officers in the asset management and assets servicing industry. That could be anyone from a start-up hedge fund [to] a big multibillion dollar hedge fund [or] a private equity fund. It could be an institutional Aussie-only manager, or anyone servicing the industry, such as the custodians and the administrators.
The company, SunGard, is a Fortune 500 vendor. We have about 17,000 people in the actual services business and our asset management team is about 2,000 people globally.
What does your company do?
Our business is about providing a system of services to the market, so a lot of what we are doing could be providing front-to-back services for the fund managers and for the assets services. Everything from portfolio management to the fund's accounting. There is also a lot around risk.
One of the big challenges today is [knowing how to] fully understand my total exposure across my entire portfolio. One of the things that is unusual about Australia is you tend to have quite large portfolios around infrastructure and private equity compared to some of the other managers. So handling these illiquid assets in a holistic manner, so we help bring together [these assets] and [and help in] understanding the risks we are taking [is important].
How do you tailor this to different clients?
As a business, we have a number of different services and solutions we provide to industry. Some clients will take front-to-back solutions, while some will say they have a problem around risk or operational efficiencies.
Quite frankly, given the last two years, a large part of our clients focused on regulatory compliance.
From a strategic perspective, we are trying to work with our clients because right now the industry is going through its biggest changes in probably the last 30 years. There are an awful lot of strategic reviews, an awful lot looking at their business models: Is this a viable business? Should we be bringing different products into the markets? What do our retail, what do our sovereign wealth clients want? What do they need?
From our perspective it is about spending time with their management team understanding where they are trying to get to, how do they see the world evolving and we try to provide them with the infrastructure. Whether we are talking about processes or down the line are you going to need to adapt or differentiate with different products, different infrastructure, and different investor reports.
There is certainly no 'one size fits all'. However, thematically the conversations we are having are fairly similar.
What are the major difficulties in your business?
We would like to bring all their assets together in a holistic framework and understand the bets they are taking. In reality, it is a problem for most people. It is not so much a technology problem, it is more a data headache. People perhaps underestimate [how hard it is] to provide some of these reports; whether that is regulatory or whether it is internal, it is very much a combination of having the right systems, having the reports from the analysts.
A big problem is sourcing the data, mapping the data, seeing the data and updating. Particularly when you move to some of the illiquid assets. It is definitely a headache for the industry.
What about risk profiling?
We see a lot of box ticking around risk management. Of course they are never going to use them internally; it is just about keeping investors happy. It is something I talk about quite a bit. I think it quite a shame we are not making a full use of some of risk data that is out there. Interestingly, we did a survey [refering to the 2013 Buy-side Market Risk Management Trends, PRMIA, March 2013). Fifteen per cent of that risk data that is produced is actually used by the people who take risk - there is a disconnect here and that is worrying.
I mean we are producing tonnes of risk data. It is not risk management, it is risk monitoring. You are spending time and money putting systems in place and you are not using that data in your investment processes. We are missing a trick here.
