Technology has had a huge impact on many different industries around the globe, and investment companies have been no exception. Until the turn of the millennium, asset companies remained generally untouched, but that dramatically changed with the rapid evolution of technical progress. Many traditional techniques for asset management are now fast becoming obsolete.
[Image Credit – Shutterstock.com]
Active and passive strategies
Passive as well as active investment funds are now often operated by technology that maintains exposure level, and places trades automatically. The growth of ETFs has enhanced this process, powered by computers that are able to handle large blocks of capital without any need for an investment manager.
Increase in transparency
Technology has increased transparency over recent years, and has been one of the drivers behind a reduction in asset management fees. Investors are now more enabled to compare fees and performances at the click of a mouse.
Investment companies used to use a very hands-on strategy for asset management, whereas now software companies seek to automate every facet of it. The new technology has effectively been leveraged to manage complex investment accounts, diversifying and rebalancing them automatically and for relatively low management fees.
Industry experts such as Wes Edens of Fortress are able, with their wealth of experience in the asset management world, to offer valuable advice to investment companies on how to deploy technology to their best advantage. Founded in 1998 as a private equity firm, the New York City-based company now manages multi-billion dollar assets in credit funds, liquid hedge funds and private equity.
Creating better value services
Asset management by investment companies has always been time-consuming and challenging, and technology is helping here in a number of ways, such as improving operational efficiency by reducing the bulk of manual processing. An investment company’s assets manager can for example now input an algorithm and leave the computer to make all the calculations. It can even set up trades on the clients’ behalf.
Investment companies are increasingly using technology to increase profits and streamline their businesses. The companies that are most efficient in taking the technology on board develop a leading edge, and build market share at the expense of their competitors. At the same time they reduce their various operational costs. The real winners, as a result, are the clients, who benefit from better value for money, lower fees and enhanced returns.