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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 .
53 %
Believe private equity investments are the costliest to manager
Operations 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 alternatives operations were the most costly to manage . Of this , 53 % of buy-side heads of operations 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 because 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 private equity administration industry grew over 18 % in 2017 with assets reaching $ 2.5 trillion .
91 %
Of heads of operations are reducing manual processes
14 Global Custodian Summer 2018