Portfolio Optimizers: The Search for the Best Solution Continues
Report Summary
Portfolio Optimizers: The Search for the Best Solution Continues
Portfolio optimization is an increasingly important part of the securities and investments industry's DNA, in which finding the best solution often requires choosing from more than two possible outcomes.
Boston, MA, April 14, 2010 – A new report from Aite Group profiles and analyzes the offerings of seven vendors that offer portfolio optimization solutions. It highlights industry trends and business drivers, and provides market sizing projections for the portfolio optimization technology market.
Portfolio optimization is an outgrowth of applied optimization techniques used by non-financial industries. In an environment in which indexing, passively managed funds, and actively managed quantitative-based funds are significant and growing portions of the investment and hedging landscape, portfolio optimization has become increasingly relevant. Further, current-day portfolio optimization technology has moved beyond its initial "Efficient Frontier" framework, and now takes into account a number of considerations, such as trading costs, taxes, and hard and soft constraints. Though portfolio optimization has traditionally relied on daily or weekly data updates, more frequent portfolio rebalancing requirements may usher in real-time updates.
Portfolio optimization is an increasingly important part of the securities and investments industry's DNA, in which finding the best solution often requires choosing from more than two possible outcomes. Potential clients of portfolio optimization technology vendors must map their worldview of how financial markets operate as well as of real-world considerations or constraints on their portfolio optimization process. In this regard, they will have a number of vendors from which to choose.
"Despite tremendous progress, portfolio optimization providers and the risk models they build will continue to evolve," says John Jay, senior analyst with Aite Group and author of this report. "New financial products are in constant development, and vendors must work to remain relevant. Though comprehensive, security-level cross-asset portfolio optimization may still be years away, it is a goal that some vendors are already contemplating."
The report profiles portfolio optimization solutions from Axioma, Investment Technology Group, MSCI Barra, Northfield Information Services, Quantal International, SunGard, and Wilshire Associates.
This 39-page Impact Report contains 25 figures and three tables. Clients of Aite Group's Institutional Securities & Investments service can download the report.