Axioma has released its PortfolioPrecision software for portfolio managers to improve the decision-making process, handle more accounts efficiently and manage risk. PortfolioPrecision also offers the ability to use tax-advantaged investment strategies across multiple accounts. The PortfolioPrecision software sits between the investment managers portfolio management and accounting systems to generate optimized portfolios and re-balance according to customer needs and restrictions.
"The idea was to address some of the shortfalls of what we consider the existing optimization technology," says Sebastian Ceria, president and CEO of Axioma. "The most important issue we considered was scaling and how does a manager get more accounts under management and scale the business without hiring more managers." In order to accomplish this, PortfolioPrecision has batch processing capabilities for rebalancing multiple accounts at one time while adhering to individual portfolio strategies or compliance rules.
Portfolio managers can also track multiple benchmarks and use multiple overlapping risk models within a single portfolio. The system requires market-information input such as historical information or real-time information, as well as the portfolio manager's account-holding information. The third input component is the business rules or constraints that the manager needs to take into account when re-balancing particular accounts. "This information would be strategy in terms of long/short, industry/sector considerations or tracking error with respect to a benchmark or any specific restrictions that an account may have," says Ceria.
The PortfolioPrecision software receives and delivers back out the information via database connectors called "database managers," adds Ceria. "The software brings the information from the accounting system and loads that data into our internal database and allows the potential trades to then be exported to an order-management system or however the manager will be dealing with those trades," he says. "This allows the portfolio manager to apply what-if scenarios to change industry or sector concentrations, then when they're confident that the list of trades are how they want them and the holdings satisfy their needs, then they can export the trade."
While he would not name all of the clients already using PortfolioPrecision, Ceria says that Deutsche Bank and Royal Bank of Canada have been using the basic software for optimization. With client feedback, Axioma has now released the PortfolioPrecision software for general availability.