Milestone Group said today that new research shows a growing number of asset owners, including pension funds, public funds, sovereign wealth funds (SWF), superannuation funds, endowments, and life insurance companies are relying on spreadsheets and ‘homegrown’ solutions to monitor and manage their investment portfolio asset allocation activities. The research was conducted in collaboration with ValueExchange, RBC, and Citisoft.
The report, Asset Owner Transformation in 2023, found that of the asset owners surveyed worldwide, more than half (55%) still use spreadsheets to monitor their asset allocation operations – up from 40% last October. Additionally, only about two in five (41%) of respondents use a dedicated portfolio management system to generate their total portfolio view. Using spreadsheets is an inefficient way for asset owners to manage investment data and adjust their allocation in response to economic and market events.
Another notable finding of the survey – which seeks to measure the true extent of digital transformation across the global asset owner segment – was that 43% of asset owners are looking to modernise their operating models and the technology that underpins their target operating models. Meanwhile, 45% of asset owners are focused on enhancing their data management capabilities as a priority over the coming years.
While this suggests asset owners share a collective desire to depart from legacy technology and operating models used in their asset allocation investment processes, the research cited several challenges commonly preventing them from achieving this change. The most common reason transformation projects do not succeed is a lack of expert resources available to execute them, with 41% of respondents citing this as the main hurdle. Other challenges include projects taking too long before desired returns can be realised (18%) and difficulties in measuring the problem and defining a compelling business case (10%).
Commenting on the report, Marian Azer, Global Head of Product of Milestone Group, said: “Amid elevated market uncertainty, asset owners must prioritise departing from personal productivity tools like spreadsheets. By adopting more sophisticated technology, investors can streamline asset allocation decision-making, implementation, and operations, react more quickly to market events, and gain the edge for their end investors. Those using the most efficient software and future-proofed operating models will be best placed to succeed in the increasingly challenging and complex global investment environment."
Barnaby Nelson, CEO of Value Exchange, states: “With 82% of asset owners looking to drive change in their investment operations this year, the willingness to make meaningful progress in how firms manage their whole-of-fund view is clear. But transformation of this scale is never easy. Moving forward, asset owners must prioritise which changes are most strategically important and sustainable in achieving their long-term goals.”
To create this report, ValueExchange canvassed the opinions of 179 asset owners from across the globe, spanning a wide variety of fund types and sizes.
The full survey report can be downloaded here.
Milestone Group is a global provider of technology solutions to the funds industry, with a focus on pooled investments including managed funds and complex fund of fund structures via its pControl platform. pControl is designed to automate and simplify the investment processes of multi-asset class and externally managed pooled investment vehicles for some of the world’s most sophisticated Asset Allocators, Asset Managers, Wealth Managers, and Fund Administrators. The cloud-based platform provides a complete, cost-effective data and process-driven solution, that seeks to enable financial institutions to focus on their core business and aims to both drive down their cost and operational complexity while reinforcing superior risk and oversight controls. Milestone Group operates regional offices in NA, EMEA, and APAC, with pControl supporting a total of USD30+ trillion on the platform. Milestone Group is a BNY Mellon Company.