Business and IT Trends Impacting the Buy Side: Implications for Asset Managers and Vendors — 2016 and Beyond

by Jay Wolstenholme, July 12, 2016
Industry Trends
Global

Abstract

Celent has released a new report titled Business and IT Trends Impacting the Buy Side. The report was written by Jay Wolstenholme, senior analyst in Celent’s Securities and Investments practice. 

The buy side is being challenged by a confluence of macroeconomic factors that have significantly influenced investment allocation decisions such as overlaying alpha on top of low-cost passive indexing, smart beta, LDI, ALM, and alternative assets, to name a few. In turn these new investment directives have catalyzed a revamping of operations and technology in order to effect and manage the new investments.

Underneath the covers, legacy operations and technology can’t efficiently, safely handle the stretch of these new multi-asset investments, right from portfolio construction through trading to portfolio management. Regulation, investment committees, and audit and client demands have all now increased the table stakes. Asset owners will move their money to the asset managers that can provide a wider range of investments, along with transparency, superior service, and auditable operations.

This report examines the major trends that are redirecting the course of buy side investing and the front-to-back operations and systems needed to optimally run the business.

The buy side is shifting rapidly. Well, maybe not rapidly — but the ocean liner is definitely turning. “The term disruption is overused, but it does seem that a perfect storm of events is hitting the buy side, and significant transformation is afoot,” comments Wolstenholme

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

3

Trend 1: Low Return Investment Environment, Multi-Asset Portfolios

6

Trend 2; Reevaluating Operational and Technical Architecture Due to Regulatory, Client Demands, and Cost Pressures

8

Trend 3: Increased Demand for Investment Decision Support Tools from AMs and Asset Owners

11

Trend 4: Growing Adoption of Systems and Business Process Outsourcing

14

Trend 5: Growing Exploration, Experimentation, and Interest in Use Cases for Big Data and AI

16

Trend 6: Asset Managers Search for Greater Volume and Direct Distribution

18

Conclusion

20

Leveraging Celent’s Expertise

21

 

Support for Financial Institutions

21

 

Support for Vendors

21

Related Celent Research

22

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