Empowering Asset Owners with Enhanced Exposure Identification and Assessment

August 30, 2023

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Given increased market volatility, the explosion of data, and emerging regulatory challenges, asset owners are coming under pressure to transform their approach to exposure management. How can asset owners respond to the challenges they face and emerge stronger?

Moving forward, more advanced technology will have to play a much greater role in exposure identification and assessment. Firms currently rely on spreadsheet-based processes and legacy systems, but these systems fail to give asset owners the ability to address practical challenges associated with implementing asset allocation policy decisions while dealing with operational cashflows, funding requirements, market movements, and lags in the availability of key pricing information.


Achieving a complete "look through"

Part of the problem is that lacking solutions tailor made to their unique needs, asset owners have had to adapt systems intended for asset managers. Today, however, bespoke, cloud-based alternatives are emerging that promise to unlock greater operational efficiency and agility for asset owners.

One of the key innovations in this respect is that modern solutions enable the storage and analysis of investment data in such a way as to address the unique challenges that come with fund-of-fund investment structures. The software allows asset owners to analyze and aggregate exposures at any level using a wide variety of factors or classification schema, providing a complete “look through” across all asset types. Asset owners are thereby able to understand the true nature of their portfolios, monitor exposures, and report on both their investments and mandate requirements. 

Essentially, the evolution in technology is about empowering asset owners through data to make the best possible decisions based on a true and timely understanding of their exposures. 

Real-world cloud based application

Already, fast-moving firms are benefiting from this approach. 

Here’s an example from one of Rimes’ own clients: a large retail pension fund and long-term manager of managers. The firm deployed Rimes’ cloud-native investment data platform to improve data management and better understand its exposures, replacing outdated manual processes that made it difficult to surface high-quality exposure insights. Our solution enables the capture and warehousing of daily snapshots of all investment positions as well as policy and asset allocation targets. The firm also leverages the Rimes platform to classify exposures to align with its multi-tier investment policy groupings.

Thanks to Rimes, the organization has been able to reduce exposures arising from its tactical asset allocation model and improve new trade implementation sent to its order management system. It was also able to improve its internal reporting. 

As this case study hints at, using technology to improve exposure identification and assessment is only part of the story. What’s important is how asset owners use this information to inform decision making and drive better outcomes. 

Explore Matrix Investment Management further or Contact us to find out about Rimes data solutions.

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