Portfolio management systems are enjoying something of a resurgence, with new electronic trading, risk management and account reconciliation functionality designed to address the needs of hedge funds. Or so say consultants Celent, in a new report that predicts total global spending on portfolio systems will reach US $2.2 billion by 2008, an average annual 4-year growth of 2.2%.
In the report, entitled “Portfolio Systems 2005 Series: Full Suites with FIX Trading,” Celent provides a market overview highlighting the trends and reasons for growth, details recent mergers, the uptake of derivatives trading, and the increased usage of application service providers. The report analyses 12 vendors of full suite systems that provide portfolio modelling, management, compliance, accounting, performance measurements and composites, reporting and FIX (Financial Information eXchange) trading.
“Portfolio system vendors must capitalize on their breadth of capability and market knowledge — before Reuters or Bloomberg eat their lunch with scaled down solutions,” says Denise Valentine, senior analyst and author of the report. “Technology providers and broker-dealers have turned their attention to electronic trading, derivative securities, algorithm programmes, analytics, and services. The asset manager will find increasing variety in what they can access through the front office and genuine value beyond accounting and management in these suites. Solutions with FIX trading capability and access to trade networks are best positioned for the new realm of ‘service delivery.’ Not surprisingly, it is the midsized asset manager most eager to join in.”
Celent says the report is the first of a series that will evaluate at least 20 portfolio systems. The following vendors are included in the study: Advent Software, Beauchamp Financial Technology, CheckFree Investment Services, DST International, Financial Models Company (acquired by SS&C), INDATA, Linedata Services, SimCorp, SS&C Technologies, SunGard, Thomson Financial, and Trema Group.
The solutions are evaluated and graded using Celent’s new ABCD analysis, which aims to provide a relative measurement based upon the solutions’ “Advanced” technology, “Breadth” of features and functionalities, “Client” base, and “Depth” of client service.
“The recent spur in mergers and acquisitions within the portfolio system market does not change the demand for this technology,” adds Valentine. “Financial institutions may shift vendors to access broader capabilities or deeper functionality, but the mergers and acquisitions will more likely combine two systems with mediocre positioning, or a large well-resourced firm with a small firm’s innovative product or capability.”