APG transforms its global operating model for better portfolio management | Asset owners

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The asset management industry has seen extraordinary changes over the past decade. Companies have quickly adapted their business models to meet the needs of their customers while expanding globally.

Through an era of mergers and acquisitions, many companies have found themselves managing multiple legacy platforms that can create silos and inhibit work culture. Companies are taking different approaches to solving these problems, which can range from outsourcing their business model transformation to creating streamlined single platforms.

At Asian investors COO Virtual Forum, a panel of asset managers and owners, explained how they are taking control of the digital transformation process.

UNIFYING SYSTEMS

Asset manager Invesco is currently in the process of outsourcing its back and middle office functions to better serve clients across its global operations. Cliff Bullock, regional head of Asia-Pacific operations at Invesco, discussed the terms under which the company decided to migrate its legacy systems to a unified vendor.

As a global company that has grown organically over the years, Invesco made the decision to conduct an enterprise-wide review of its multiple systems. This ultimately exposed some common issues, namely duplicate systems, redundant processes, and the manual intervention required to re-enter data as it moved from one platform to another.

Bullock Cliff,

Invesco

“Data is obviously critical, and we had data silos in our decentralized model, so there was an opportunity to improve data governance,” Bullock said. “It got us very quickly moving forward and the solution is not just to transform the platform, but it’s a transformation of the whole ecosystem inside out.”

By unifying the multiple platforms into a single, streamlined one, the obvious benefit, according to Bullock, is Invesco’s ability to scale quickly and increase its capacity in the overall ecosystem.

“It allows us to bring new instruments, new products or complex customer solutions to market much faster,” he said.

The second major benefit of the new incoming system will be its overall simplification, reducing the complexity and risks inherent in Invesco’s current system.

“This will allow us to connect all of our front office, middle office and back office departments. And it helps us streamline multiple technology applications across the organization, radically simplifying our environment. »

With all of these benefits to be gained, Bullock stressed that the company must remain focused on business continuity and plan carefully throughout the transformation as a priority.

“Executing such a transformational agenda in many countries is problematic, no doubt, and one of the things we are striving for is that we create as little disruption as possible to existing business and the key to this causes the least amount of disruption to our customers.

PORTFOLIO MANAGEMENT NOT CLIENTS

APG is a Netherlands-based pension investment company that manages over $680 billion in assets on behalf of its approximately 5 million Dutch pension plan participants. While the fund has expanded its portfolio in the APAC region, it has no clients outside of the Netherlands and is looking for another kind of utility from its platform.

APG’s business is to find returns on investments at a reasonable cost, and the fund often makes decisions about what part of those investments it can make itself and what it can outsource.

“We have this model where we have external managers, but around 80% of our assets are managed internally, and to that extent – in addition to having offices in Holland – we have offices in New York, Hong Kong, and recently we have moved to Beijing, Shanghai and will be moving to Singapore,” said Genio Vander Schaft, COO, APG Investments Asia.

Compared to Invesco’s decentralized model, APG focuses its investment and trading in APAC through a highly centralized model controlled at its base in the Netherlands, which is supported by multiple thin-film platforms in its many forefronts. posts.

Genio Vander Schaft, APG

“However, there are some things we might want to do in the region, like take advantage of shorter settlement cycles, and due to the time differences between Asia and our headquarters, we need to think about how to do that.

“So what we’re trying to do is leverage operators in the region like custodians and sub-custodians, because we don’t want to grow the back office here,” Schaft said.

As part of its growth strategy, APG has had a presence in Hong Kong for over 15 years and has increased its workforce from 20 to 100 during this time.

“It’s because we have started to shift our investment strategies to this region. We wanted our own employees to manage our strategies ourselves. As part of this, we then decided that we wanted to have the entire global emerging markets equities team in this office, which meant that we also had to deal with Latin America and Eastern Europe from ‘here,’ Schaft said.

“We could do all of this without losing sleep, because we could leverage the back office in the Netherlands, which allowed us to support the portfolio managers and do the transactions here. The model is quite flexible and fundamentally suits our purposes as it is focused on portfolio management and not regional clients.

The key to APG’s success at Apac, according to Schaft, lies in managing the relationship between its operations in the region and its headquarters in the Netherlands. Schaft said that can be a challenge at times.

“It’s a pretty big organization and we only have a few overseas offices, so it’s also a bit of a Dutch-centric organization.” What we ultimately did was set up a “buddy system,” where relevant departments in different outposts could communicate with their counterparts in head office and maintain an understanding of what was expected of them,” Schaft said.

“We introduced this system about a year ago, and I must say it has really improved the relationship between the Hong Kong office and the main organization that we rely on.”

¬ Haymarket Media Limited. All rights reserved.


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