Reduce TCO without sacrificing incisive analysis
Earlier this year, we partnered with Qontigo to launch a new offering, Axioma Risk: Elements (‘Elements’). Using a fixed set of fundamental statistics, stress tests and risk settings from our enterprise software, Axioma Risk, the offering reduces the total cost of ownership without sacrificing incisive analysis.
Siepe shares its view on the partnership, the significance of the solution, and the key trends it is helping to address among its hedge fund, asset management and asset owner clients.
In addition to operationally-resilient tools, emerging managers need improved, cohesive and actionable portfolio insights to drive investment management and marketing/business development
Many small to mid-sized investment managers sometimes view their existing risk management tools as “good enough.” More progressive managers often come to the realization they would like to have higher quality, institutional-grade risk models.
This is often driven by a portfolio manager’s desire to expand their investment universe (e.g., asset classes and geographies), gain a better understanding of their risk exposures using high-quality models suited to their investment approach, more intelligently explain performance, or increase alpha by optimizing and/or hedging the portfolio differently.
Other reasons include a need to demonstrate to investors and/or regulators that the firm has an acceptable understanding of portfolio risk, with sophisticated, operationally-resilient tools and processes used to measure and manage exposures, especially as assets under management increase or there are periods of outperformance (or underperformance) that require explanation.
However, “right-sizing” risk infrastructure is often viewed as challenging, with the perception that best-in-class risk systems are expensive and can be difficult to manage
Even as investment managers contemplate enhancing their risk management tools and processes, they often perceive the total cost of ownership as too high. The major cost components include licensing risk analytics software and risk model content, upfront costs for the initial design and implementation and ongoing costs for data management. There are other soft costs such as needing to reimagine existing processes and workflows to ensure that new risk toolkits are leveraged effectively.
Axioma Risk: Elements was designed to lower a manager’s total cost of ownership (TCO), and our partnership with Qontigo allows managers to easily and more economically implement and leverage a robust risk solution
Qontigo launched the Elements offering to provide a lower-cost entry point for multi-asset class managers, presenting a predefined set of exposures, Greeks, yield and carry statistics, stress tests, historical scenarios and VaRs. This functionality is well-suited towards evaluating risk across multiple asset classes and leverages all of the power of the Axioma multi-asset factor risk models. If needed, Elements can be supplemented with other Axioma tools to provide a comprehensive, actionable view of portfolio risk.
Siepe offers a secure, cloud-native data warehouse solution that spans multiple complex asset classes and has seamless integration capabilities with Axioma’s products, including Elements. The existing data structure helps reduce both the initial implementation cost and timeline.
Where the partnership shines, however, is in ongoing data management. Risk systems require clean data, both in terms of inputs (instrument detail) and outputs (risk measures). Far too often, inputs are challenging to aggregate and manage across an investment organization, and too much time is spent evaluating and cleansing outputs to ensure their appropriateness and accuracy. We have built automated tools to handle the data management process and are able to offer clients either self-service tools or outsourced managed services to ensure investment organizations are able to focus on interpreting results, rather than managing the data. The result is the manager’s ability to derive actionable insights without their team having to spend time analyzing and scrubbing data.
About Axioma Risk: Elements for Siepe
Axioma Risk: Elements, coupled with Siepe’s expertise in risk systems implementation, data management, and portfolio management software helps managers extend their risk capabilities significantly while reducing total cost of ownership. Together, the combined solution helps managers progress along their risk journey, enabling investment teams to increase their potential and facilitate better transparency for both investors and regulators.