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Securities Industry News, March 10, 2008
Enterprise Data Management
Avoiding the Human Integrator
Armanta communicates between silos, gives fund managers data manipulation tools
At large fund management firms, the burden of integrating computer systems, data flows and applications often falls on the portfolio manager. Morristown, N.J.-based Armanta aims to change that through a combination of applications and a development framework for automating business processes, letting portfolio managers concentrate on investing.
A fund manager needs to understand risk, rebalance his portfolio, monitor trades and view holdings across several portfolios, explains Peter Chirlian, CEO of Armanta and former managing director and head of the financial strategies group at Prudential Global Asset Management. Typically, a manager needs to access systems from separate silos for each task, and getting them to work together is a challenge.
Armanta technology sits on top of a customer's existing infrastructure, speeding implementation. It pulls data from proprietary systems and external sources into an abstraction layer and then populates a live cache that can run across computers in multiple locations for high performance. Business automation is provided by moving data in two directions--as market conditions change, a firm can modify its models and change its portfolios, either through reports that traders can act on or direct links to order managementsystems (OMS).
Scalability
When the CTO of one of the largest European pension fund managers setup its American investment arm, he wanted a flexible system that could provide reporting and decision support. "One thing for sure is that tomorrow will be different from today," he says, "and we needed a technology structure that would allow us to start with current needs and provide the flexibility to enhance it to meet future needs."
After meeting with Armanta and outlining the fund's requirements, the CTO asked for a proof of concept, which was delivered in six weeks. It "would have taken any other company half a year, if they could have accomplished it at all," he asserts.
One customer wanted to improve views and controls over its hierarchical portfolios, which owned chunks of other portfolios in the firm, and structured products, where standard accounting systems took no account of the many underlying synthetic exposures. Armanta built in three months a system that can look into the portfolios and structured products, run analytics, update pricing with real-time data feeds and send data up and down as prices, allocations or market conditions change.
A technology director at a leading asset management firm, which would not permit him to be named, needed to replace an aging system built on technology that was being phased out. He wanted a new application that would replace the functionality of the old without two years of internal development time.
"All of our portfolio managers on the fixed-income trading floor are managing their portfolios in relation to a benchmark and the data we build out in our nightly processing," he explains. "We have quant models that we run across our holdings to allow portfolio managers to see how their portfolio is constructed in relation to the benchmark or index. They can get a sense of how they stand in health care or tobacco and they can drill up and down in their portfolio in different dimensions and choose from high level to individual level. They can also aggregate information, or weight it based on algorithms such as market value or accrued interest."
He admits his firm has unusual requirements. Some fund managers
run multiple funds and need very fast
multi-fund views. "We found vendors
who were very good at risk, but when
it came to the user experience and
responsiveness of the application we
had a hard time," he says.
Armanta sits on top of any kind of
data and allows users to manipulate
it. "It is very flexible in how it displays
data, and it is very extensible,"
adds the technology director. "Their
product is well thought out. For the
things it doesn't do out of the box it
provides a very easy mechanism to
add that functionality. And it doesn't
make any assumptions about how you
run your business."
Build vs. Buy
Eric Kaplan, CTO of seven-year-old
Armanta, says that in addition to freeing
up development time for more value-added
work, firms do better buying
third-party solutions such as Armanta's
because they have been created to meet
more than one requirement at one firm.
A company with one problem to solve
might view Armanta as overkill.
"But if they build their own solution
and then their business changes,
they realize they should have bought,"
says Kaplan. "As a software company,
we have to be flexible and generic so
we can handle the requirements of a
lot of different customers; when firms
build their own, they often lock themselves
in down the road."
One Armanta user recently wanted
to track its portfolios at the strategy
level. If a manager thinks technology
will outperform mortgages, he might
decide to overweight technology. But
he can also allocate his portfolio in
multiple ways--an IBM holding might
be 80 percent allocated to a technology
strategy and 20 percent to a global
strategy. Armanta delivered the ability
to create strategy views in a week.
"It is a very unique product in the
market," says the CTO of the
European pension fund manager. "It
has kept its flexibility even as it has
matured into more of a solution."
A director at a large European bank
says his portfolio managers are getting
more information because of Armanta,
which allows them to "scrutinize every
piece of data that comes to their desktops,"
he says. "You can look at it
down to the detail of what you physically
own, like a corporate bond, and
find the internal rating and decide if
you want to be overweight, under or
neutral. You can also look at any summary
level you want, how much concentration
of your portfolio is broken
out by asset classes--munis, corporates,
asset-backed, mortgage-backed
securities and derivatives."
He says the firm's managers find it
as flexible as Excel and like its ability
to manipulate data. The system
includes a feature called Sandbox
where users can run what-if analytics
without influencing the production
programs. When users take data from
models and make a change in holdings,
the change flows through the system
in real time with full audit trails.
"During the sales process, we ask
prospects for their biggest business
process automation headache," says
Armanta's Chirlian. "Then we
demonstrate how quickly and easily we
can provide a solution. For example,
each customer thinks differently about
exposures. They might be very quantitative--
mortgage exposure in terms of
past delinquencies. We don't lock
them into anything."
Due to potential clients' very particular
requirements, the Armanta system's
components and framework
deliver perhaps 80 percent of what a
firm needs and makes it relatively easy
to build the remainder.
When a user decides to optimize a
portfolio by a certain percent, the system
can drill through the holdings to
implement a workflow, show what
trades are needed, and send them to the
OMS. "Typically the human becomes
the integrator," says Chirlian. "Now
when he types something into his
Bloomberg we allow it to be seamlessly
integrated with his operations. We like
to understand what a client wants and
then we can tailor the product." |
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