Cyberspace is quickly becoming the meeting place of choice for plan sponsors, money managers and consultants.
According to a recent survey conducted by INVESCO Inc., 54% of plan sponsors and consultants surveyed believe that relationships with investment managers will grow stronger because of rapid, responsive communication over the Internet.
About 50% of the plan sponsors and consultants interviewed said they spend approximately 24 to 31 full business days a year using the Internet.
The survey was conducted because of INVESCO's work to develop an Internet strategy within each business group including mutual funds; institutional, 401(k) and global business groups, which collectively manage $95 billion in institutional assets.
The need for such an e-commerce commitment was made even clearer by the 72% of the plan sponsors and consultants in the study who said they prefer to receive information electronically, whether to monitor portfolios, collect data for searches, keep abreast of the market or perform other tasks.
One plan sponsor who took part in INVESCO's survey has taken the e-commerce initiative and applied it to his fund.
Michael Bell, senior investment officer at the Alaska Permanent Fund Corp., Juneau, decided to make use of technology wherever and whenever possible to bridge geographic and time zone differences with the fund's money managers by using a private Internet site to post portfolio information.
The site includes portfolio holdings, performance numbers to date, performance during rolling periods, proxy voting information, market information, research reports and contacts to their external money management firms.
Currently, information is gathered daily via e-mail attachments from individual management firms that are uploaded to the site. In order to access additional data, staff members have to go to the managers' secured Web sites. But in the future, Mr. Bell hopes to have direct links to managers' pages via the fund's site and do away with the uploading of data.
The Web strategy is easier and is expected to save time for the $26 billion fund's 31-member staff.
Three external equity managers INVESCO, Putnam Investments and Schroder Investment Management are posting their numbers on the site. A fourth firm, which Mr. Bell would not name, is expected to begin posting its data soon.
Data on the fund's internally managed portfolios also are online.
As contracts expire in the next 15 months with 13 other equity firms, it is expected the Web posting requirement will be included in the new contracts. The contract stipulates that firms have one year to comply with online posting of portfolio data.
The five managers for fixed-income side and real estate ultimately will move in some fashion to provide similar data via the Web, Mr. Bell said.
If some managers find they are lacking in their cyber readiness, one company is beginning to market its Web tools to help managers report performance and risk analysis to clients.
CrystalBox, developed by NetRisk Inc. is being beta tested by eight users at CDC Investment Management Corp., New York. NetRisk Managing Director Peg Esgate expects the formal release of the Internet-based reporting and analysis tool will be in February, while CDC's pension fund clients will be able to download their portfolio data from the Web in January.
Pension fund executives will be able to use the site to combine portfolio data of different money management firms and look at correlations of different portfolios before hiring a firm, Ms. Esgate said.
"We see it as complementary to the consultants' efforts and not a replacement of them,' Ms. Esgate said.
Before creating the software, Greenwich, Conn.-based NetRisk conducted a survey of 240 asset managers about the Internet and found there was an increased commitment to timely reporting of risk and return performance via the Internet, she said.
Mr. Bell said he strives for "strategic relationships" with managers using the Internet as the medium. The more familiarity managers can deliver to clients through a complete Web site the more likely the client is to look at what other services are offered, he said.
While none of those surveyed by INVESCO were eager to buy investment services via the Web, they believed the Internet was a useful tool to gaining information on prospective managers.
"There really seems to be an opportunity for managers to be innovative and creative in how they set up their Web sites," said Nina Lesavoy, global partner at New York-based INVESCO.
Officials at Grantham, Mayo, Van Otterloo & Co. believe their Internet strategy of offering clients private Web sites has helped in marketing the firm.
Topher Callahan, head of consultant relations at Boston-based GMO, said his firm launched the site with a special client link to individualized sites just after the first quarter.
Since then, Mr. Callahan has seen more than 100 hits in any given month from clients and consultants, with 150 clients gaining access to their portfolio information via a password-protected link.
The GMO site offers to both pension fund clients and their consultants transaction activity information, portfolio size, performance data, benchmark data and market commentary.
Additionally, consultants can call up portfolio data for more than one client.
According to the INVESCO survey, most institutional investment managers fail to meet Internet-related client needs in the following areas: search features; site maps; ease of navigation; password-protected areas; institutional investor information; product information; performance data; asset allocation information; product analysis; and manager intelligence, including access to white papers, research and interactive services.
Consultants and plan sponsors also thought that general company information such as history, office locations and bios were lacking.