Online Portfolio Valuation >>>
Providing investment managers with accurate, up-to-date information is critical to empowering them to make informed decisions. Increasingly, investment managers rely on receiving real-time information from multiple sources.
An important factor in their success is not only timely access to information but also having the tools that allow them to evaluate, analyse and identify the critical factors.
Odyssey's Workstations provide tools to ensure that detailed valuations
can be accessed via standard or customised views. It provides the ability
to perform simulations, evaluate risk and effectively “slice and
dice” data quickly and easily, ensuring that it can be presented
in a way that facilitates detailed analysis.
The Workstation provides consolidated or comparative views across selected
portfolios. The selected view may include executed orders and pending
market orders, giving users the flexibility to perform “what if”
analysis. Access to a full transaction and holdings history allows users
to “drill down” to the pertinent information.
Financial organisations may elect to handle multiple transactions on a “First In, First Out”, “Last In, First Out”, “Weighted Mean Price” or “High Cost” basis. This ensures compliance with a large representation of market practices.
Exposure Analysis >>>
Providing investment managers with information on the risks inherent in investment decisions can substantially reduce downside performance. The Portfolio Management & Analysis Component offers a series of tools for analysing exposure to various risk factors, ranging from sector, geographic and currency factors to issuer and interest rate exposure.
Within the risk functions, derivatives are systematically broken down into their cash equivalent parts. For example, a stock option will be represented with the equivalent exposure to its underlying instrument. This ensures that a portfolio manager can rapidly monitor exposure to any source, with the comfort of knowing that the data was computed using proven market conventions.
Fund Look Through >>>
The continued growth in usage of collective funds is a sure path to rationalising the investment process by offering differing combinations of standard products covering the spectrum of clients’ risk tolerance. However, for management purposes, it is also useful to be able to see the components of each fund scaled to the exposure within each individual portfolio. For this purpose, users can split mutual funds into their component parts. These parts may be either the exact instruments in the fund or percentages invested in various market segments.
Cash Management & Cash Flow Forecast >>>
Critical to portfolio and relationship management professionals, cash management and liquidity forecasting tools are included in the Portfolio Management & Analysis Component to ensure that future cash flows (such as fixed-income coupons, redemption payments, dividends and derivative settlements) can be taken into account when analysing a portfolio. Corporate actions can be automatically generated by the Odyssey's Workstation and the effects of these events can be used in simulations and valuations, thereby providing a clearer picture upon which to base solid investment decisions.
Checks for cash availability, credit lines and other limitations can be automated and managed using constraint functions. This ensures that client management regulations are met and customer specific requests can be accommodated in an efficient, systematic manner.
Performance Analysis >>>
In line with the global trend for more transparency in customer reporting, performance measurement is one of the key areas in which financial organisations are facing challenges. In addition, regulatory and compliance pressure is forcing banks to standardise their management and performance reporting.
Using Odyssey solutions, several of our clients have obtained certification of their investment track record with respect to the Global Investment Presentation Standards (or local equivalents: such as the Swiss SPPS).
In this context, the Portfolio Management & Analysis Component is used to compute performance figures, manage Composite content and evolution, and produce standard presentation reports. Odyssey is committed to supporting these standards by adapting the Portfolio Management & Analysis Component to any new GIPS requirements well in advance of the effective date. For example, in full compliance with the GIPS requirements for 2010, the Portfolio Management & Analysis Component already computes time-weighted rates of return (TWRR) on periods spanning external flows.
Our commitment to these standards means that both investment professionals and clients have the comfort of knowing that the figures used for analysing and discussing portfolio performance are computed according to internationally recognised methods.
Performance figures can be broken down to asset classes or individual security levels; the various components of the performance figure, such as currency, capital, income and fees components, as well as the distinction between realised and unrealised returns can be displayed. All these figures can be displayed as amounts or as rates of return. For more complex requirements, in particular, comparison with benchmark returns, the Portfolio Manager Workstation provides advanced performance attribution functions.
Transaction Processing and Order Entry >>>
The Portfolio Management & Analysis Component maintains a full history of executed transactions that can be viewed (on screen or in reports) according to flexible selection criteria. Selections, such as a daily summary or trading activity per financial instrument, can be performed for a given portfolio or group of portfolios at any time, making the Component the ideal online system for portfolio and relationship managers to deal with real-time client queries.
Flexible transaction statuses can be defined to reflect institutions’ internal processes; from simulation, order entry, confirmation and accounted, through to settled. For any enquiry, the investment manager can select the range of transactions to be included.
Portfolio and relationship manager productivity also means using the
tools that enable new orders to be initiated with minimum effort and risk.
Within the Order Entry process, users can specify whether to generate
Block Market orders within the active session. This session can then be
saved and retrieved for further manipulation. The Session Management mechanism
can also allow/require a separate user to validate the order proposal
prior to release. At any time, a user can request validation of the live
order session from the Portfolio Management & Analysis Component,
with the mechanism checking its content against all relevant restrictions
and reporting the results accordingly.
With simple “point and click” actions, a user can select several
cash positions and choose either to convert them into a given currency
or to place them on a time deposit. The Portfolio Management & Analysis
Component can then initiate all the corresponding orders accordingly.
Similarly, a user can click on a currency exposure and choose to hedge it. Portfolio Management & Analysis Component generates the necessary foreign exchange contracts.
The Portfolio Management & Analysis Component provides the tools for maintaining typical order workflows within financial organisations. These flows can be defined by transaction type, the nature of financial instrument within these transactions or combinations thereon. Specifically, we provide the classical ‘four eyes’ validation process required under certain circumstances (e.g. two layers of validation required for a security order of more than x% of the value of the portfolio). Such controls can be initiated at the point of order, as well as the automatic notification of other user(s) whose validation is required during the workflow.
These are purely examples of how the Portfolio Management & Analysis Component can speed up operational tasks, reduce input error rate and free up time for investment professionals to concentrate on portfolio and relationship management, and client service.
Comprehensive Instrument Coverage >>>
As the financial markets intensify, new, more complex instruments are increasingly being traded. The Portfolio Management & Analysis Component supports an extensive range of investment vehicles such as stocks, fixed income with various accrual schemes, convertible and option bonds, and mutual fund shares, as well as derivative products such as options, currency forwards and futures. With the Advanced Analytics module described below, this coverage can be extended to include more OTC interest rate products such as Forward Rate Agreements, interest and currency swaps, as well as derivatives with more complex pay-off schemes.
The Portfolio Management & Analysis Component financial instrument toolbox facilitates the construction of structured products. For example, a high-yield product where the redemption price is linked to an underlying stock price could be modelled as a single instrument composed of a bond and a short option position. The ability to model these types of instrument means that banks can respond rapidly to new market innovations.
Multiple analytical tools are provided in the Portfolio Management & Analysis Component, including a comprehensive set of yield, duration and convexity functions for fixed income instruments, and standard option pricing according to the Black-Scholes and binomial models.
Compliance Checking >>>
The main function of the Portfolio Modelling and Rebalancing component (described below) is centralised investment management. The Compliance Checking function compares a portfolio, or asset class within a portfolio, to an associated investment profile. This investment profile defines the asset class structure of the portfolio (asset allocation), as well as individual holdings targets (model portfolio or recommendation lists). Additionally, legal or client constraints can be defined. The Compliance Checking function shows where the portfolio is out of line or where it violates constraints. Generating orders to rebalance the portfolio is handled in the Portfolio Modelling and Rebalancing component.