AFTAs 2018: Best IT Team—Charles Schwab Investment Management

Charles Schwab won three categories in year’s AFTAs, starting with the best IT team award.

Charles Schwab Investment Management’s (CSIM’s) Investments Technology team wins this year’s best IT team category at the AFTAs, thanks to its development of a unified platform that reduced the need for the firm’s portfolio managers to oscillate between SAGE, the firm’s Strategic, Analytics, Generation and Execution platform, and BlackRock’s iconic risk analytics, portfolio management and trading platform, Aladdin. 

As the industry eliminates fees across passive products, CSIM has had to handle increasing volumes while reducing operating costs in order to maintain profitable product fee structures. Increasing portfolio manager productivity was therefore critical, especially in fixed income, where available inventory typically dries up within three hours of the market open. Portfolio managers need actionable intelligence to make informed investment decisions and realize efficiency gains when dealers present inventory. It therefore became imperative to eliminate the need for portfolio managers to continually switch between SAGE and Aladdin. The Investments Technology team of 15 supported 83 users—21 equity portfolio managers, nine equity research analysts, six traders, 18 fixed-income portfolio managers, 18 credit research analysts, five investment research users and six oversight personnel—and prototyped a unified platform supporting both SAGE and Aladdin, resulting in BlackRock’s OpenAladdin offering. The Investments Technology team and BlackRock created a combined development team to develop OpenAladdin, the first iteration of which allowed SAGE to evaluate over 800 constraints across 150 issuers in minutes, enabling fixed-income portfolio managers to make more judicious investment decisions in massively reduced timeframes. The total AUM of CSIM’s core products grew 17 percent between December 2017 and August 2018 without any need for a corresponding increase in portfolio management staff. “We attribute our success to strong alignment between our technology and portfolio management teams,” says Manish Ghayalod, managing director, head of Investments Technology at CSIM. “We needed to ensure the portfolio management team had the appropriate scale and efficiency to support a rapidly growing asset base, so we simplified and integrated our technology environment, refined the end-to-end investment workflow, and improved collaboration within the team.” 

Ghayalod says the integration needed to happen at the API level so CSIM could leverage the computational power of Aladdin to quickly evaluate issuer constraints across the investment universe. “As BlackRock’s flagship partner, we pioneered Aladdin’s OpenAladdin framework to develop the necessary efficiency to maintain a competitive advantage,” he explains. “It was critical for SAGE and Aladdin to function as a unified solution, where SAGE supports the custom aspects of the investment process and Aladdin supports the standard aspects.”

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