| | DECEMBER 20198CIOReviewIN MY OPINIONTaking Portfolio Analytics to the Next LevelBy Paul Algreen, CIO, SVP, Janus Capital GroupGreat portfolio managers are commonly great storytellers. They have a finely tuned ability to use market observations, risk management expertise, personal insights, and intuition to construct a unique story or mental model that enables them to predict upcoming plot twists in the markets and for their holdings. They leverage this story into their portfolio management process and in their communication with clients. If you look at some of the most successful and iconic portfolio managers in our industry like Warren Buffett and Bill Gross, they consistently use expert storytelling to capture the attention of their clients and develop long-standing relationships. As asset management firms grapple with decisions around evolving next-generation portfolio analytics platforms to support their investment process, a key focus must be on supporting the development of that storyline for both internal and external consumption.Traditionally, the CXO's role was in developing a portfolio analytics technology strategy centered on optimizing basic dimensions like cost, features, and technology adoption. However today, forward-thinking technology leaders are focused on the more value-added assignment of engaging the client. As participants in the investment management industry struggle to remain relevant amidst plunging global yields across all asset classes, a new, pressing challenge to engage the client in new and differentiated ways has emerged. It is no longer good enough to have consistent outperforming returns; we must identify new and unique methods of capturing the attention of our clients and provide them with an experience that includes a robust accounting of their investment story.Most legacy portfolio analytics systems were architected from the bottom-up. They were designed with the analytics library and models as the central component and architected under the burden of the technology constraints at the time. Additionally, legacy systems often arose from a single asset class solution and then later modified to handle additional asset classes and add on new capabilities. Most existing portfolio analytics systems are optimized to quickly calculate a wide array of risk measurements and capture portfolio attributes but don't overlay broader market measures or historical trends that are a key ingredient for constructing a comprehensive portfolio story. As with most aging platforms in an asset manager's application portfolio, the limitations of
< Page 7 | Page 9 >