RIMES has published a white paper on the challenges faced by buy-side firms when managing index and benchmark data. The results reveal an industry facing escalating costs and lack of control due to growing volumes and complexity.
RIMES consulted 275 data management, performance, risk, compliance and operations practitioners from 133 buy-side firms at 25 discussion forums in some of the largest global financial centres throughout 2012.
Highlights of the findings reveal that during the last year:
- Index vendors continue to launch new products, creating a dual challenge of growing volumes and increasing complexity
- Clients have become more demanding, requiring more sophisticated investment management techniques, more frequent performance reporting and increased use of custom indices
- These factors combined to increase complexity and reduce profitability for all buy-side firms
Alessandro Ferrari, SVP Global Marketing at RIMES, comments: “Global investment markets continue to endure the multiplier effects of the financial crisis, five years on. A lack of returns is driving product innovation and increasing the number of benchmarks required, while a constant stream of new regulation increases the cost of doing business. Profit margins are being squeezed, which makes planning and cost control difficult, and therefore all investment managers must do more with less.
“As a result, most of the asset managers we spoke with have pursued cost management programs. Successful firms will be those that deliver a permanent increase in efficiency and return on investment. Often this requires fresh thinking to cut costs and boost productivity. Using a managed data service from a specialist vendor can help firms reduce the complexity of managing large volumes of complex data while improving business agility.”
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