Style analysis and asset allocation software developers are adding significant features, including a potentially effective method of ending arguments over the validity of manager performance comparisons.
Investors are expected to show increased interest in asset allocation software because of the volatility in world security markets, said Jay Kimple, a vice president with M"bius Inc., a software developer in Research Triangle Park, N.C. Style analysis software is already popular.
Among new product developments:
*Wilshire Associates Inc.'s Compass consulting product will have new "rules" for creating standardized performance universes, which could end debate over peer comparisons of managers.
*M"bius is marketing an asset allocation product, M-Vest, that creates an efficient frontier using investment return forecasts, as well as historical numbers, for asset classes.
*Ibbotson Associates is planning a new release of its EnCorr product that is euro compliant, a demand of many of its international clients. EnCorr includes style analysis and asset allocation software, and the new release could be out as early as February.
*Frank Russell Co. Analytical Services is revamping its style analysis product, Russell Style Classification, with a possible release in the next six months. Details on how the program will be restyled weren't available. The restyled product will be part of the Russell Analytical Services-Mellon Bank merger, expected to be completed by the end of the year.
*Zephyr Associates Inc. is promising a completely new StyleADVISOR product in September. But before that it will produce, probably in December, a new release of the current product that is Y2K-compliant.
*BARRA Inc. is preparing Internet delivery of data for its style analysis product.
M-Vest is M"bius' first asset allocation product. In developing M-Vest, M"bius took over the marketing and selling in the United States of the analytical model Vestek Systems Inc. built for asset allocation.
San Francisco-based Vestek builds advanced analytical programs and collects global financial data. Vestek provides the data sets needed for providing historical and expected returns used in M-Vest.
M-Vest is different from most asset allocation products in that it does provide expected return data, according to Mr. Kimple.
M-Vest also has multiple ways of determining the optimal portfolio, including a hybrid method that combines total risk and benchmark risk.
M"bius' style analysis product is an option to the company's M-Search, an investment manager database system. Another product, M-Watch, provides a suite of M"bius products.
M"bius charges $3,500 a year for an M-Vest license, but if all the data sets are added, the cost can reach $20,000 a year.
As an option, M"bius' Style Analysis Plus costs $4,000 a year.
Some 600 firms use M"bius products. The number of actual users probably exceeds 1,200, estimated Mr. Kimple.
Besides plans for a new euro-compliant software package, Ibbotson's EnCorr will have an enhanced interface for its optimizer, said Derrick Wilkinson, market specialist with Chicago-based Ibbotson. The interface will be easier to modify to meet individual client needs.
The new software version also will send reports to Microsoft Powerpoint presentation software, without losing formatting (elements of style and presentation). EnCorr already sends reports to Microsoft Word without loss of formatting.
The style analysis and asset allocation software benefits from EnCorr's tight integration, according to Mr. Wilkinson.
EnCorr also has "very reputable data," said Mr. Wilkinson. "We fact-check our data before distributing it to our clients. We have a broad offering (of data), over 10,000 data series," he said.
Data for EnCorr is on Ibbotson's Web site. It has new database connections. Clients can read Morningstar Principia, M"bius, Effron/Plan Sponsor Network and CDA/Weisenberger databases in their native formats from within EnCorr Analyzer and EnCorr Attribution software.
An EnCorr subscription is $10,000 the first year, but is discounted in following years. It has about 1,400 clients.
Wilshire's Compass is a consultant-in-a-box product that does many things, and includes style analysis and asset allocation software.
It offers Style Metrics as well as holdings-based style analysis, said Mark Williams, a vice president at Wilshire in Santa Monica, Calif..
In addition, Wilshire soon will provide hundreds of standardized universes for investment performance comparisons.
"The advantage (of the standardized universes) for an investment adviser is he won't have to worry about explaining the construction of the peer group that he is comparing himself against," said Mr. Williams.
Other features of Compass are the ability to evaluate alternative passive rebalancing strategies; to build rebalancing programs based on market valuation models; and to simulate asset allocation or manager changes. The program also allows risk management and filtering of Wilshire's manager database, using more than 250 criteria.
A key advantage of the product is it includes substantial help from Wilshire consultants. "Clients have got the consulting division behind it," said Mr. Williams.
The product also includes current studies being done by Wilshire Associates. It has approximately 300 users and costs between $24,000 and $36,000 a year.
The developers of Zephyr Associates' StyleADVISOR claim software isn't much good unless you can understand how it works.
They claim they have the most understandable software interface of any style analysis product available.
The next generation of StyleADVISOR, due out next September, will have a higher degree of flexibility so it can be customized by clients, said Roma Morris, vice president for client services at the Zephyr Cove, Nev., firm.
Besides style analysis, StyleADVISOR does asset allocation, graphics generation for organization and presentations and database creation. It has a utility that automates the creation of reports to save time.
It provides monthly updates on 2,000 indexes and 8,000 mutual funds and provides quarterly updates of more than 5,000 separate account composites.
More than 200 firms, and an estimated 1,000 individuals, use StyleADVISOR. It costs $15,000 a year for the complete package.
BARRA's Global Style Analyzer software has versatile graphical features so it can produce tables and serve as presentation software, said Shant Harootunian, vice president of the investment data products division of BARRA, Berkeley, Calif.
He said BARRA has a global reputation for constructing high-quality analytical models. That expertise in building models is evident in Global Style Analyzer, he said.
Like other models, BARRA's product can determine the aggregate style of a customized portfolio and be used in rebalancing the allocation of assets.
Global Style Analyzer has about 100 users. It costs $8,000 a year.
