The State of Wisconsin Investment Board tapped into the expertise of financial technology firms in creating the new single reporting platform for its approximately $74 billion in internally managed assets.
In September, Madison-based SWIB, assisted by fintech adviser Citisoft, completed a four-year program to integrate data from its various investment asset classes into a single reporting format, combining risk-management and investment performance data for its internally managed assets. The transition was done at a total cost of $48 million, "on time and under budget," said Vicki Hearing, SWIB spokeswoman.
As of Sept. 30, the state investment board managed a total of $115.8 billion in assets, including $105.5 billion for the Wisconsin Retirement System.
The new reporting format allows SWIB to move "from siloed investment technology to a sophisticated asset-class and risk-aggregated model," said David Villa, chief investment officer, in a Sept. 19 news release announcing the completion of the program.
SWIB's move highlights what sources said was a trend among institutional investors to use technology to provide a more holistic current assessment of performance and risk measurement beyond monthly audited reports provided by custodians and fund administrators.
"It's a rethink of how you get serviced," said Josh Smith, co-founder and CEO at Solovis Inc., a Dallas portfolio management reporting and risk analytics software developer that targets endowments and foundations and pension funds.
Added David Bates, managing partner, North America, Citisoft, Boston: "We've seen more interest and have engaged with health-care companies and pension plans about technology and operational needs and how to marry them." Citisoft advised on and implemented SWIB's shift to a custom reporting program.
The same need for more accurate and timely reporting also applies to money management, particularly active managers, Mr. Bates added. "You can make a parallel to (money) managers that need to reposition their value proposition as an active manager," Mr. Bates said. "What is the value that an active manager can bring to an institutional investor? It's trending toward risk aversion as well as alpha generation. Managing risk is becoming a value proposition to managers as well."
The adoption of this kind of technology isn't necessarily a repudiation of services provided by custodians but allows asset owners to enhance what they are already getting, said Farris Qunibi, vice president, marketing, Novus Partners Inc., a New York portfolio analytics software provider for money managers, pension funds, endowments and foundations. "Fintech firms won't replace custodians anytime soon, but what we're doing is more targeted. … You'd be shocked to see how poor the data is," he said, adding "We don't view custodians as competitors at all."