Thomson's PSG Survey Shows Attribution Is Hot Button

Thomson Investment Software's Performance Services Group plans to beef up the performance attribution functionality of its Perascope system, in response to feedback from a survey it completed among US money managers.

According to Mike Slemmer, general manager of the Thomson unit, performance attribution--drilling down into a portfolio to determine how component sets of instruments are performing--is emerging as a hot issue.

The PSG survey--of more than 250 investment firms with assets under management ranging from less than $500 million to more than $20 billion--asked respondents to rank their current systems in 40 different performance measurement and 16 performance attribution categories.

With regard to performance attribution--which 57 per cent of the respondents are engaged in to some degree--the rating of current systems was an average of just 3.2 out of 6. Some of the features that were felt lacking include the ability to drill down multiple levels, composite attribution against benchmarks and fixed income attribution.

Performance measurement capabilities were rated at a little higher average, at 3.6 out of 6. Here, issues include universe comparisons of peer managed accounts and benchmarks, inadequate risk and dispersion measures and the graphical presentation of data (especially an issue for marketing support).

Data management, security and integration emerged as issues too. Slemmer suggests that as firms have employed dedicated performance systems to get the level of functionality required, so easy integration--with often more than one portfolio management and accounting system--has become increasingly important.

Operational issues are also growing in importance. Slemmer says that this is likely linked to the fact that buyside firms are now investing in more seasoned IT talent that has had experience of operations, perhaps on the sell side. According to the survey, 44 per cent of the systems in use at respondents are spreadsheet-based, and 24 per cent of respondents use spreadsheets alone. Spreadsheet use among sell side institutions has raised concerns among regulators, which cite issues such as data security and lack of auditing as drawbacks to their deployment.

PSG's own flagship product--Perascope--has been bought by more than 50 clients, on either an installed or bureau basis. Perascope offers a Microsoft Windows user interface, and runs either in a standalone PC or in a client/server relational database environment.