Capabilities of the Best Portfolio Management Software
This guide outlines the key considerations when comparing the best portfolio management platforms. Our goal is to help you evaluate the suitability of prospective solutions and inform your selection process.
There are no one-size-fits-all solutions, as certain vendors and platforms will better suit
different firms depending on your business needs, size, client base and other factors. Therefore, it’s vital to assess the strengths, weaknesses and functionality of different solutions and their suitability based on your firm’s specific requirements.
At Limina, we have been clients and know that transparent advice is hard to come by. We know it’s difficult to determine the best software for your portfolio management needs, which is why we have created this guide.
We aim to keep this guide as honest as possible because we genuinely want to help you as a fellow investment manager. At Limina, we might or might not be the best fit (follow the links to learn more). In either case, we want you to choose the right system for your specific needs.
Assumptions to Challenge Before You Start Looking for the Best Portfolio Management Systems
Finding the best solution for your business that can empower your portfolio managers is critical to ensuring you have the capabilities to meet your firm’s needs, now and in the future, which can mean the difference between long-term organisational success and failure.
Before you embark on a selection process, we recommend that you pause and consider your ideal solution. Should you look for something more than “just” a Portfolio Management Solution (PMS)? Are you happy to take a best-of-breed approach, or should you consider a front-to-back system?
We highly recommend considering if a joint PMS and generation 3 Investment Book of Record (IBOR) in the same solution could benefit your business. Over the past couple of years, such solutions have come into existence, and they are superior to previous PMS solutions since they can create any view of your positions and cash, now and in the future, including simulated changes. Read more about how an IBOR enables a better portfolio view.
Different types of systems can vary dramatically in price. We’ve created a separate guide that walks through cost ranges for portfolio management systems.
Five Considerations when evaluating Portfolio Management Software
1. Flexibility and Efficiency
Your prospective platform’s flexibility is significant as your new solution must be able to adapt and be configured to the way you work and your ideal processes instead of forcing you to fit within the system’s parameters and limitations. Connecting to external data sources, importing data and integrating with existing tools and systems can enhance your capabilities and save time.
Look for a flexible system that can fit your workflows, processes and overall existing ecosystem of solutions and service providers without imposing unnecessary change.
A flexible solution will help increase operational efficiency across your entire
organisation and different functions. Explore the benefits of a system with an open
architecture that connects seamlessly to your order management system for trading and pre-trade compliance systems.
2. Strong Decision Support
The suitable PMS should allow for more informed decision-making and improved efficiency. By providing you with the right data you need at the right time, you can be sure of your data’s reliability and relevance to your decision-making process, leading to more efficient workflows with the optimal number of steps.
The best portfolio management software is underpinned by an IBOR that enables a better portfolio view. Such PMS’s support strong decision-making by giving you comprehensive real-time data insights into your portfolio, which can be easily spliced to answer specific questions for key decisions. It will also enable you to understand your exposures, gain a complete view of available cash and view upcoming cash movements.
3. Accurate Real-time Views of Data in All Areas for All Users
Access to a complete and accurate real-time data view improves decision-making and reduces risk. Advanced IMS software will provide your whole team with a complete and accurate view of data (current, forward-looking and historical) embedded into the investment lifecycle, ensuring that there is no need for batch processing, which can be complex and costly.
Other capabilities to look for include the ability to pivot across or within asset classes to manage market risk across entire, as well as multiple, portfolios. When planning a portfolio rebalancing, an interactive cash ladder that shows T+1, T+2, and other settlement timings is crucial.
4. Ability to Enrich Data Models with Custom Data and Analytics
Most Fixed Income, Fund and Stock Tracking Software will be able to show standard classifications such as investment portfolio hierarchy, region, sectors, etc. If you want to see pivot tables and rebalance to custom classifications, only the best software for portfolio management will have your back. Such data might include ESG data, internal ratings and more.
Your middle office operations can support such classification data through manual maintenance file uploads of integrations to the data source. Ideally, integrations are powered by built-in investment data management capabilities.
5. The Top Portfolio Management Technology is Frictionless to Use
Having the ability to access the system from anywhere is more crucial now than ever. Having this capability from the get-go provides front and back-office team members with the information they need from the office or when working remotely.
Modern solutions will enable you to securely use and access insights from any device without installing software, using a VPN or installing remote desktop solutions.
Two Soft Questions to Ask when Comparing the Best Portfolio Management Platform Vendors
It’s not just functionality and technology that matters when selecting a vendor. You’ll want to ensure the vendor will prioritise you as a client and develop in a direction that will benefit you over the coming years. We recommend two types of questions to uncover the soft match with any vendor:
1. Is There a Good Cultural Fit?
Specific solutions and their capabilities might wow you, but evaluating the provider’s overall culture is equally important to determine if you want to work with them. Find out if they’ll be willing to do what it takes to ensure you have the best service and solution experience possible.
Supporting questions:
- Does the vendor have a user-first mentality?
- Do all organisational members embody the same client-first mentality?
- Do you have confidence they’ll strive to meet your needs and expectations?
2. Does the Vendor Invest in their Technology?
You’ll want to choose a provider that’s on the cutting edge and offers the latest modern technological advancements and innovations. A vendor that makes frequent improvements and enhancements to their systems will be better placed to match your firm’s functionality needs.
Supporting questions:
- Does the vendor update its system with the latest technology and continuously improve features?
- How much does the provider invest in their products and R&D? How much goes to new development vs technical debt?
- How frequently does the provider launch product updates?
Listen to Limina's CTO and OMS Product Director talk about investments in smoother workflows and user interface:
Trend to Take into Account: External Trading Desks
There is a current trend towards external service providers taking on parts of the workflows in the investment management industry. This includes trading, which can range anywhere from complete outsourcing to supporting your trading team during certain times of day, e.g. Asian trading hours if you’re based in Europe or North America.
Having a solution that directly connects to such providers and sends you feedback in real time is essential. With the proper PMS containing investment data management capabilities, you can set alarms to get emails if unexpected events happen.
Summary of the Best Software for Portfolio Management
An aspect we haven’t touched upon, which is essential, is to ensure any portfolio management tool you work with supports the asset classes you need. Whether you’re trading equities, bonds, mutual funds, exchange-traded funds, etc, your system must support them.
Finally, to recap what we’ve covered in this article:
- Consider if you’d ideally want a best-of-breed PMS or a PMS that is part of a broader solution and hence offer superior portfolio views and cash ladder
- Consider the cost of different types of solutions
- Confirm that the solution offers all the capabilities you need, such as:
- Efficient workflows
- Strong decision support
- Accurate real-time views of data, including non-trading data that is still essential for front-office decision-making
- Ability to enrich data models with custom data and analytics
- Access from anywhere
- Does the vendor fit culturally with your business, and does the vendor invest aggressively in R&D?
Your chosen software vendor must support your needs, now and in the future, so that you can bolster your capabilities, remain competitive and future-proof your infrastructure and processes.
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