Outsourcing of Investment Performance Systems March 2016
John Matsikas Head of Investment Performance Voya Investment Management
[email protected]
Why Outsource? Less desire to host technology internally Relief of systems upkeep with industry product trends
Click to edit Master title style
edit Master subtitle style Move to a more predictableClick costtomodel
Independence & objectivity Focus on the “value-added” aspects of the job
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Who is outsourcing what? Asset managers vs. asset owners Larger vs. smaller firms
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Back office vs. middle office
Types of investment performance measurement functions Benchmark index data management
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Why not outsource? Perceived loss of control & quality Mitigation: Intense oversight Mitigation: Internal data warehousing
Resource commitment to the effort
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Mitigation: Senior management commitment Mitigation: Get outside help Click to edit Master subtitle style
Move from fixed to variable cost model Mitigation: Embrace it
Adverse effect on morale Mitigation: Focus on value-add
Reduction of internal talent pool Mitigation: Deal with it
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Voya Investment Management – Total Return System Lift-out Profile Institutional asset management business Total portfolio return, GIPS-compliant composite returns, benchmark index returns, and returns-based (ex-post) risk Click to edit Master subtitle style measures
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500 Portfolios, 75 composites, 150 benchmark indexes Investment Performance team of 6 (including myself) Out-of-date, internally hosted version of system Outsourced investment accounting & other back-office platforms WiFi Network: 3/18/2016 Convene Conference Centers Password: meetings
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Voya Investment Management – Total Return System Lift-out Project Retained same system & vendor Major upgrade to most recent system version
Click to edit Click to editMaster Master subtitle style title style Added significant functionality Developed new GUI 1 internal Project Manager No external help other than vendor Duration = 1 year WiFi Network: 3/18/2016 Convene Conference Centers Password: meetings
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Systems Architecture – Former State Externally-hosted systems Source Investment Accounting System #1
Source Investment Accounting System #2
Internally-hosted systems
Source Investment Accounting System #3
Downstream Consumers
Internal Translation Tool
Click to edit Click to editMaster Master subtitle style title style Investment performance calculation inputs: Daily valuations, capital flows, expenses & fees
Benchmark Index Data Various Providers
Inst. Client Reporting
External Returns
Investment Performance System
Marketing Group
Senior Mgmt.
Portfolio Statistics
RFP Group
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Website
Attribution Data
Competitve Rankings
Risk Mgmt.
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Systems Architecture – Current State Externally-hosted systems Internally-hosted systems Source Investment Accounting System #1
Source Investment Accounting System #2
Source Investment Accounting System #3
Downstream Consumers
Investment performance calculation inputs: Daily valuations, capital flows, expenses & fees
Benchmark Index Data Various Providers
Click to edit Click to editMaster Master subtitle style title style Investment Performance System
Marketing Group
Competitve Rankings
Portfolio Statistics
Attribution Data
Internal Data Warehouse Calculated returns
Inst. Client Reporting
External Returns
Senior Mgmt.
RFP Group
Website
WiFi Network: 3/18/2016 Convene Conference Centers Password: meetings
Risk Mgmt.
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Voya Investment Management – Total Return System Lift-out Lessons Learned Define requirements up-front in excruciating detail
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Go with a fixed-price bid
Traditional waterfall vs. Agile development approaches Get outside help! Involve internal user base from start to finish
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