Harness the Power
The asset management world is a performance-based environment — whether for a pension plan’s funding requirements or a mutual fund’s peer rankings. An organization simply cannot afford to leave alpha on the table.
In this highly competitive environment, an Asset Owner must examine both the investment side and the operational side of their Asset Managers. 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 referred to as “operational alpha”.
Today, in order to maximize operational alpha, an Asset Owner should carefully monitor trading commissions (brokerage expenses) as they are often a portfolio’s second largest line item expense after sub-advisory fees. Commission costs are borne entirely by the Asset Owner’s portfolio and 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.
BOOMERANG: Potential Benefits of Operational Alpha
BOOMERANG may generate operational alpha through its potential to significantly reduce commission (brokerage) costs while automating the Asset Manager’s satisfaction of their client mandates. Thus, BOOMERANG is unique in its potential to provide improved performance to Asset Owners while also enhancing the productivity of Asset Managers.
The operational alpha potentially generated by BOOMERANG’s automated process becomes more important 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 below):
For Asset Owners, BOOMERANG can provide higher share capture rates and greater commission savings. The result is the potential for greater operational alpha and improved performance.
BOOMERANG is Easy for Asset Managers
For Asset Managers, BOOMERANG is easy to implement and use. BOOMERANG’s highly intuitive interface enables an Asset Manager to set up BOOMERANG in a couple of minutes. BOOMERANG can provide Asset Managers with an easy means to automate satisfying Asset Owner mandates while also providing greater value to an Asset Manager from their existing commissions.
Flexible Implementation Options
Asset Owners can implement BOOMERANG in a customized and flexible manner design to suit the Asset Owner’s specific needs. BOOMERANG’s inherent flexibility, powerful features and ease of use enable customized implementation strategies. Bloomberg Tradebook and UAT will work with you to develop a custom BOOMERANG implementation strategy that fits the needs and desires of your organization.
(PLEASE NOTE: BOOMERANG can be utilized by Asset Owners to either: 1) Generate potential commission savings without utilizing commission recapture; or 2) Increase the potential savings generated by commission recapture.)
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 BOOMERANG aims to achieve.
Bloomberg Tradebook is the exclusive technology licensor for UAT’s patented iPerX technology. Please see BLOOMBERG Tradebook Disclosures [Read More].