First in a Series of White Papers from Leading Data & Advisory Services Provider to the Asset Management Industry
(Wilton, CT, March 2015)— How to measure and manage infrastructure alpha in investment operations is the first of a nine-part series of White Papers from Convergence, Inc. “Infrastructure Alpha: A Practical Guide to Implementation,” provides straightforward guidance on how to measure, track and discuss infrastructure alpha across all operational functions of a company.
“Infrastructure alpha is a financial benefit created by non-investment teams that can be measured and then managed to help companies grow assets and profits,” said John Phinney, Co-President, Convergence. “The more efficiently and effectively non-investment teams work in an asset management company, allows investment colleagues to trade at a lower unit cost and operational risk.”
“Infrastructure Alpha: A Practical Guide to Implementation” uses the marginal contribution to profit and risk (MCP and MCR) approach to measure and value the financial value contributed by non-investment teams. While operational work can vary in terms of complexity volume and standardization–units of work can be measured in every infrastructure function.
The Convergence White Paper includes an illustrated example on how to calculate and examine MCP/MCR in the trade settlement group within investment operations, a function that is common to all asset management companies. The White Paper also examines:
- The Impact of Operating Risk on MCP
- The Impact of Capacity on MCP
- The Impact of Benchmarks on MCP & Infrastructure Alpha
“Non-investment teams that create infrastructure alpha provide their organizations with the financial scale needed to improve net management fees that can be re-invested in the business and offset fee pressures,” added George Evans, Co-President, Convergence.
Future “Infrastructure Alpha” White Papers from Convergence will include in-depth looks at fund accounting, management company accounting, tax, risk management, compliance, legal, investor relations and human resources.
To download “Infrastructure Alpha: A Practical Guide to Implementation,” and to receive notification of future Convergence White Papers, go to:
https://www.convergenceinc.com/research/Infrastructure-Alpha-Whitepaper-March-2015.pdf
To register for Convergence’s 30-day free trail of CMDX-Daily ADV-Brochure Filing Changes, visit https://www.convergenceinc.com//register/adv-brochure-trial
About Convergence
Convergence provides analytical data, benchmarking, custom research and advisory services to the Alternative Asset Management industry. The firm’s data is unique because it is enriched by subject matter experts and provides best practices based on carefully selected peers. Convergence focuses on a manager’s infrastructure including fund and management company accounting, investment operations, risk management, marketing materials, investor relations, tax, compliance, technology and service providers. Clients include asset managers, administrators, audit firms, financial technology firms, investment management consultants, prime brokers, custodians, investors, compliance firms, recruiting firms, colleges and universities and individual research. The Convergence approach creates value for clients by helping them research, understand infrastructure expenses, identify opportunities to increase market share, ensure practices are consistent with best in class peers, select service providers that best support strategic business goals, enhance investor due diligence efforts, perform difficult custom research and provide ongoing education. For more information on Convergence please visit www.convergenceinc.com.
