The global portfolio systems market, which supports all types of asset management firms, reached approximately $ 2.32 billion as of year-end 2006, and is expected to reach US $ 2.67 billion by year-end 2010, according to a new report by Aite Group. This
represents an annualised growth rate of 2.8%.
The report, entitled ‘Multi-Asset Portfolio Systems: The Buy-Side's New Pied Piper', analyses the buy-side portfolio systems technology market and assesses the offerings of new vendors in the banking, brokerage and treasury sectors.
Aite Group claims that the growth of hedge funds, and the need for risk controls and proper valuation coupled with the increasing use of derivative instruments across a broader population of investment managers, is altering the development queue for portfolio systems. Furthermore, multi-asset portfolio systems, those with the ability to process all types of assets including non-listed exotic instruments, are now attracting greater interest from buyers.
The report highlights that whilst investment managers prefer to use fewer vendors, there is only a select group of technology vendors today handling all instrument types with an integrated suite that offers support in areas such as advanced derivative processing, risk analytics, yield curve analysis, instrument valuation, and collateral management.
"Even if buy-side firms are not currently engaged in a high volume of OTC trades, they are aware that further down the road, a change may take hold. To that end, buy-side firms are querying technology vendors on their solutions' ability to process these instruments today and in the future," says Denise Valentine, senior analyst at Aite Group and author of the report. "We anticipate eventual convergence of traditional and multi-asset portfolio systems. At the moment, however, the vendors in the report provide an integrated multi-asset portfolio suite with a range of features and functionality not available elsewhere. This means they will stay in the limelight for at least a few more years."