India ranks among the best performing market in the universe of emerging markets. But when it comes to the use of technology in active fund management, we are a few notches down.
According to experts in the financial technologies sector, countries in the Asia-Pacific region, other than India, have been more receptive to new technologies in fund management. Wealth management companies in these countries are exposed to newer integrated offerings covering all aspects of client management, ranging from client acquisition and due diligence to customer -relationship management including profiling, portfolio management, performance measurement, threat simulation and risk probability and reporting.
However, asset management companies in India use statistical projections (derived using simple fund models) while deciding on fund allocations and return forecasting. Many AMC's are now adopting simple portfolio- modeling methods to" post 'What-if' queries, pick incremental risk measurements (such as var and beta) and computation of portfolio levels.
In India, the advancement has been clearly in internal analytics, which supports the decision-making process, “said MS Chandrshekhar, global head - mutual fund practice, 31 Infotech.
Developed countries have gone a bit further extending automation on their part to 'finding the right market’ to park their money, he said.
“This can be attributed to the increase and growth in alternate markets, electronic communication networks (ECNs) and so on. Technology has been adapted to route orders generated at buy-side shops to the right market with execution efficiency or price efficiency,” Mr. Chandrashekhar added.
Increased competition among AMCs is forcing firms to be more competitive in the services they offer. "We use a plethora of portfolio analytical tools (also called 'Factsets') while deciding on fund allocations. As far as mutual fund industry is concerned, we are pretty in line with global standards,” said Mihir Vora, senior vice-president, HSBC Asset Management (India). Echoing Mr. Vora's opinion, Bharat Shah, head-portfolio management service, ASK Raymond James, said. "We have our own set of software and tools to help in our wealth management decisions. Data management and analysis takes precedence in all matters pertaining to our use of technology in fund management”.
The' AMCs, however, do not use quantitative models “as they are largely used by hedge funds" quantitative models grind a lot of data as they aim to capture as many signals as possible, substantially from the prices of under-lying funds. They tend to generate portfolios that translate these prices in indication of asset allocation. Therefore, these models operate with a large quantity funds in order to offer a wide diversification. “Indian securities market allocates only a minuscule portion of their earnings on technological upgradation. This allocation is very less when compared to other markets (the US spent about 20% of their revenue on technology upgradation on an annual basis),” said Jignesh Shah, managing director, Financial Technologies.
According to experts in the financial technologies sector, countries in the Asia-Pacific region, other than India, have been more receptive to new technologies in fund management. Wealth management companies in these countries are exposed to newer integrated offerings covering all aspects of client management, ranging from client acquisition and due diligence to customer -relationship management including profiling, portfolio management, performance measurement, threat simulation and risk probability and reporting.
However, asset management companies in India use statistical projections (derived using simple fund models) while deciding on fund allocations and return forecasting. Many AMC's are now adopting simple portfolio- modeling methods to" post 'What-if' queries, pick incremental risk measurements (such as var and beta) and computation of portfolio levels.
In India, the advancement has been clearly in internal analytics, which supports the decision-making process, “said MS Chandrshekhar, global head - mutual fund practice, 31 Infotech.
Developed countries have gone a bit further extending automation on their part to 'finding the right market’ to park their money, he said.
“This can be attributed to the increase and growth in alternate markets, electronic communication networks (ECNs) and so on. Technology has been adapted to route orders generated at buy-side shops to the right market with execution efficiency or price efficiency,” Mr. Chandrashekhar added.
Increased competition among AMCs is forcing firms to be more competitive in the services they offer. "We use a plethora of portfolio analytical tools (also called 'Factsets') while deciding on fund allocations. As far as mutual fund industry is concerned, we are pretty in line with global standards,” said Mihir Vora, senior vice-president, HSBC Asset Management (India). Echoing Mr. Vora's opinion, Bharat Shah, head-portfolio management service, ASK Raymond James, said. "We have our own set of software and tools to help in our wealth management decisions. Data management and analysis takes precedence in all matters pertaining to our use of technology in fund management”.
The' AMCs, however, do not use quantitative models “as they are largely used by hedge funds" quantitative models grind a lot of data as they aim to capture as many signals as possible, substantially from the prices of under-lying funds. They tend to generate portfolios that translate these prices in indication of asset allocation. Therefore, these models operate with a large quantity funds in order to offer a wide diversification. “Indian securities market allocates only a minuscule portion of their earnings on technological upgradation. This allocation is very less when compared to other markets (the US spent about 20% of their revenue on technology upgradation on an annual basis),” said Jignesh Shah, managing director, Financial Technologies.
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