[ U P D AT E ]
European
buy-side view
alternatives
operations as the
most challenging
to manage
PRIVATE DEBT AND ALTERNA-
TIVE ASSET CLASSES WERE
CITED BY THE BUY-SIDE AS THE
MOST OPERATIONALLY COSTLY
TO MANAGE.
14
Global Custodian
Summer 2018
53%
Believe private equity investments
are the costliest to manager
O
perations for alternative investments
are the costliest to manage, according
to a new survey of 100 European buy-side
heads of operations.
Around 60% of respondents to a survey
conducted by SimCorp and WBR said private
debt operations are the most challenging to
manage in-house, and over half said alter-
natives operations were the most costly to
manage.
Of this, 53% of buy-side heads of op-
erations found private equity the most
challenging to support, despite the asset
class being one of the fastest growing over
the past two years.
“Alternative investments are challenging
to manage, particularly because the data,
characteristics and market factors vary
significantly from traditional asset classes.
Researching private equity and hedge funds
can be time consuming and expensive be-
cause market data is not readily available,”
says Hugues Chabanis, product manager,
alternative investments, SimCorp.
“Interestingly, the long-term make-up
of alternatives investments often outlives
the technology systems managing them,
leading to a constant refinement of manual
workarounds to cope with the reducing
functionality of best-of-breed systems.”
Chabanis added the heavy burden to
manage these operations will no longer
be justifiable, and buy-side firms will need
an organisation-wide approach to manage
these assets for the long-term.
The cost in managing these strategies
follows the recent growth for private equity
and hedge fund administrators that provide
operations outsourcing services.
Research from eVestment showed the pri-
vate equity administration industry grew over
18% in 2017 with assets reaching $2.5 trillion.
91%
Of heads of operations are
reducing manual processes