Case Study

Investment managers remain under intense pressure to achieve and maintain peak performance. Many depend on an array of systems, accumulated over time, to support their evolving business requirements and plans for growth. Yet too many point solutions can create operational obstacle courses requiring custom integrations for sharing data and supporting daily workflows.

“‘Best of breed’ is often seen as a plus. However, in terms of an investment manager’s technology infrastructure and architecture, it adds an incredibly high level of complexity. The result is that no one individual in the organization has a single source of truth of their data,” says Lotte Tonsberg, Enfusion’s Head of EMEA Sales and Executive Director EMEA.

This was the case at a leading $500bn AUM New York-based institutional asset manager using multiple point solutions to manage distinct components of its investment lifecycle. The commodities’ front office was leveraging a legacy order management system (OMS) that connected directly to their in-house quantitative system for trading. Meanwhile, the back office had embraced the Portfolio Management System (PMS) and General Ledger Accounting modules of the Enfusion platform. While the PMS and General Ledger Accounting modules were operating smoothly and in sync with each other, having a legacy OMS in the front office led to multiple sources of data and operational headaches. As a result, multiple teams were required to support the daily reconciliations and critical operations throughout the trading lifecycle.

“One of the big issues for investment managers is that the front office knows one thing, the middle office knows something else, and the back office is working from another set of data. Having one single source of truth is massively valuable,” says Labib Mahfouz, Enfusion’s Americas Channel and Alliance Director.

To get to a single source of truth, they retired their legacy OMS and converted to the Enfusion OEMS.

By leveraging Enfusion’s API, they were able to connect the OEMS to their proprietary quant system. Now, the Enfusion platform covers the front-to-back office requirements, and the API covers the full range of the system providing users with unprecedented reporting. Enfusion’s API is living and breathing and is constantly being updated and expanded to include more platform functions. Many updates are crowdsourced from clients and enhanced by client demand for greater functionality across asset classes.

Through this bi-directional API connectivity, the firm’s trading desk can now route orders directly from their proprietary system to the Enfusion OEMS for compliance checks and then on to their executing brokers. Trade fill data automatically populates back into both systems. What’s more, because the OEMS and investment book of record (IBOR) are contained within one platform, the firm benefits from automated order generation: users can create new orders on the fly based on their positions. Operating on Enfusion’s single front-to-back platform significantly minimizes risk and also enhances profitability by eliminating costly and clunky integrations between multiple systems in the trading process.

To further streamline and unify operations across commodities trading, the client took advantage of Enfusion functionality for trading futures calendar spreads, which led to the retirement of a third system.

The API integration and commodities migration was so successful that after completing a merger with another asset management firm, the client also migrated their fixed income operations, with 24 funds under management, to Enfusion.

By migrating to Enfusion, the firm consolidated multiple systems into one, optimized workflows, and unified all middle- and back-office operations in New York from several locations. This helped maximize efficiencies and minimize trade breaks, allowing the firm to redeploy staff to higher-value activities such as investment research and analytics.

For investment managers using multiple vendor systems, a common source of friction can be the disconnect between their disparate accounting/GL solution and their PMS/OMS/EMS. Accounting systems are often designed with a T+1 orientation, while front office systems tend to be trade-day oriented. As a result, IBOR and ABOR are often out of sync with the OMS during most of the trading day.

In addition, when an investment management system employs a wipe-and-load approach, the manager’s full dataset is only accurate at the start of the day. As the day goes on, any OEMS-driven data that needs to flow back into other systems or tools (for example, external PMS or risk systems) used by other teams can gradually degrade, due to how many technical handshakes and handoffs must happen among systems.

As data quality degrades, portfolio managers, risk managers, and other teams have to mentally account for the degradation, and the consequences of guessing become exponentially bigger with transaction size, volume of activity or market movement. Portfolio managers can lose sight of investable cash and position weights and either miss out on market opportunities or delay putting their capital to work, particularly if they have a global multi-asset operating model with 24x5.5 trading and flows from investors around the world. And when markets are tumultuous or activity is high, fragmented systems can cause even greater inefficiency and errors.

Unlike many other systems that just build bridges between solutions, Enfusion’s platform contains multiple ‘modules’, but all are part of the same native foundation. All are powered by the same golden dataset. At the platform’s core is the fully integrated portfolio management system (PMS) and general ledger, which ensures that IBOR (Investment Book of Record) and ABOR (Accounting Book of Records) are always in sync. And, the OEM module is a native part of the same system not bolted on through acquisition. As such, the IBOR, ABOR, and OEMS are always drawing from the same dataset in real-time. This data alignment not only provides users with accurate and reconciled positions and cash (traded/investable cash and projected settled cash) to support portfolio analysis and construction, and manage benchmarks and counterparty information, but to also keep internal teams on the same page throughout the trading day, ultimately achieving true interoperability.

With Enfusion, investment operations staff have significantly fewer issues to reconcile and front office staff always have what they need: an accurate view of positions, cash, risk, and relative performance. No more disparate datasets, or guessing where they stand—Enfusion’s single platform and single source of truth power more effective operations from front to back.