Pennsylvania-based software giant SunGard taking this year’s award for providing the buy side’s premier risk and portfolio analytics product is far from a massive upset—the vendor’s stable of buy-side solutions is enviable and arguably unmatched across the industry. But the way it arrived here could provide insight into the direction this highly contested category—recently won by Barclays and LCH.Clearnet—is now headed: It’s not just the analytics that determines the outcome of this perennially competitive category anymore, but the service that truly distinguishes great from good.
A multi-asset class factor model solution with reporting, portfolio construction, and optimization included, SunGard APT helps firms tackle complex derivatives with a library of 200 pricing models for valuation and simulation capabilities, as well as analytics for calculating fair value, implied volatility, and the greeks. APT Enterprise, the managed service version of the platform launched this year, was taken by approximately a third of the provider’s 20 new clients in 2014—a percentage that will only grow as more small buy-side shops become more sophisticated about managing risk across disparate strategies.
As Tim Short, chief risk officer at one of those new clients, City Financial, told Buy-Side Technology earlier this year, “Consistency of approach, which APT has in its multivariate principal component analysis (PCA) methodology, means SunGard understands the long-term nature of risk and reporting. Tools we require for risk attribution and deep-dive analysis include factor-based decomposition of value-at-risk (VaR), incremental VaR, contribution to total volatility, and being able to stress the portfolio for macro factors. In addition, the optimization facility in APT Pro is helpful when minimizing unintended risks for our more complex multi-asset and fixed-interest funds.”
Laurence Wormald, who heads up SunGard’s buy-side research, adds that City Financial is representative of the kinds of clients that are flocking to APT: small in size but “flashy” in scope and aspirations. “What they want to be able to do is offer genuine diversification, by having investors take more of their funds, and therefore they want to show the totality, an holistic view really proving that diversification. You need to be able get an intuitive idea of risk, aligning that with clients’ risk appetite, and then aggregate that information for senior management, too. It’s a twin challenge they face,” he says.
And a challenge, the judges agree, that demands an entirely different kind of service.
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