Nearly 40% of Australian asset managers open to outsourcing: survey
SYDNEY, AUSTRALIA — Australian asset managers are increasingly focusing on enhancing the quality and accuracy of their operations to attract and retain assets.
A recent survey conducted by Northern Trust and WBR Insights, which included 300 global asset managers, revealed that nearly 40% of Australian asset managers who have not yet outsourced their trading functions are now considering it.
Prioritizing quality and investor satisfaction
The survey highlights that two of the top strategic priorities for asset managers globally are enhancing quality and accuracy (73%) and improving the investor experience (60%).
While cost considerations remain significant for half of the Australian respondents, there is a growing realization that alternatives to increasing alpha exist beyond mere cost-cutting.
Advantages of outsourced trading
Robert Arnott, head of Northern Trust’s Asia Pacific (APAC) Brokerage business, said that outsourcing trading functions can offer several advantages, including:
Expertise and global reach
Outsourced providers offer global trading capabilities from multiple desks in various regions, staffed with experts who possess extensive market knowledge. This can be particularly beneficial for managers looking to expand into new asset classes such as digital assets, private equity, and real estate.
Advanced technology
Outsourcing allows managers to leverage sophisticated technology without the need to build or maintain their own complex systems. This includes advanced trading technology, data analytics, and AI capabilities that can enhance trade execution and decision-making.
Regulatory compliance and trade cost analysis
Outsourced providers can support managers with precise trade-related data crucial for regulatory requirements and trade cost analysis, enabling more informed and data-driven conversations about execution performance.
Governance and risk management
Effective governance is crucial for ensuring execution quality throughout the trade lifecycle. Outsourced providers can offer robust risk management frameworks that assist with oversight, advisory, monitoring, surveillance, and reporting activities. This allows managers to focus on their core business activities while maintaining compliance and managing risk effectively.
Adapting to market challenges
As Australian asset managers navigate a challenging market landscape, the trend towards outsourcing trading functions is gaining momentum.
This shift reflects a broader strategy to improve operational quality and investor experience in a competitive environment.
