May Add Alpha and Retain & Grow AUM
The asset management world is a performance-based environment. In this highly competitive world, it does not make sense to have a talented Portfolio Manager add alpha only to squander these gains on high operating costs. The enhanced performance generated by reducing operating expenses is often referred to as “operational alpha”.
Today, in order to maximize operational alpha, it is important to carefully monitor trading commission costs as they result in a dollar for dollar reduction in performance; therefore, consistent with best execution obligations, the fiduciary rationale exists to minimize commission costs wherever possible.
Still, adding any alpha is much easier said than done. BOOMERANGSM has the potential to add alpha by lowering commission costs. Quite simply, lower commission expenses create operational alpha that improves investment performance.
BOOMERANG: Potential Benefits of Operational Alpha
The potential for additional operational alpha generated by BOOMERANG becomes more important given the given the tight clustering in the quintile performance rankings of the US Equity Markets. In this environment, three to six basis points can move a Fund from the mid-point of one quintile into the bottom of a higher quintile (see chart).
BOOMERANG’s flexible and automated process has the potential to benefit current and cumulative Fund performance in a significant and positive fashion.
Retain and Grow Assets Under Management
Asset Managers face serious shortcomings as they work to honor Client Commission Mandates. Inadequate technology, workflow disruption and manual workloads all contribute to unfulfilled Client Commission Mandates. At present, it is almost assumed that Client Commission Mandates results will fall far short of their requested participation goals. However, a history of regulatory inquiries regarding market timing, shelf space, B shares, C shares and 12b-1 fees provides no comfort or reassurance to organizations with a history of unfulfilled Client Commission Mandates.
Thus, a system that could automate the fulfilment of Client Commission Mandates and address the associated workflow issues could offer a significant advantage an Asset Manager in their efforts to retain and grow assets under management.
BOOMERANG and Client Commission Mandates
While many Asset Managers continue to stumble in their efforts to meet their Client Commission Mandates, BOOMERANG’s patented technology may provide a clear advantage to Asset Managers who address these shortcomings in a clear and proactive fashion. BOOMERANG’s automated process has the potential to create a significant advantage for an Asset Manager as they communicate the positive results of their client mandates to senior executives and Board Trustees.
BOOMERANG’s benefits vary with individual users and do not represent any guarantee of future performance or benefits. Market conditions, share volume, share commission rates, share availability, manager trading style, execution exchange and rule parameters used by the Manager can all impact and change the results achieved by BOOMERANG.
Bloomberg Tradebook is the exclusive technology licensor for UAT’s patented iPerX technology. Please see BLOOMBERG Tradebook Disclosures [Read More].