The asset management sector includes managers of both retail and institutional funds. They range from multi-product, multi-strategy investment houses to niche, single asset class or single strategy hedge funds.

The asset management sector is continuing to adapt to a new, more demanding, operating environment.

Their clients are placing increasing scrutiny on their asset managers - their performance, transparency and operational resilience. Institutional clients in particular, are much more savvy. They are becoming more demanding, less patient, and more willing to replace asset managers. This has forced a refocus within the sector on investment performance and the tools and processes required to obtain differentiated investment results.

Asset managers are naturally continuing to focus on cost containment given the importance of investment performance, operational capabilities and the impact operational failures can have on reputation risk. Transformation based on the automation of manual processes is one answer. It can help reduce costs via reduced headcount, reduce operational risk, and if done right, it can pay for itself.

Many asset management firms are expanding their product suites as a way to differentiate themselves. Others are looking to new products as an opportunity to emerge as a leader in a market niche. The hedge fund market, for example, has seen explosive growth. At the same time, firms are looking to differentiate the services they provide to clients.

Asset managers are also adapting to fundamental changes in the securities markets. They are having to adapt to new liquidity options, direct access, crossing networks, and brokers. But they are also benefiting as execution has become commoditized and market makers offer value-added services in conjunction with execution: integration with order management systems; facilitating the post-trade confirmation and allocation process; and giving away algorithmic trading capabilities to gain access to order flow.

With the recovery in the markets asset manager have been able to face up to pent-up demand from years of IT budget cuts. An increasingly strategic approach to investment is apparent. The focus on data management exemplifies this strategic approach as firms begin to think about how to better position data in their broader technology applications.

Credit Eterna helps asset managers with these challenges as a consultant and managed services provider. Credit Eterna offers solutions in operational transformation, operational risk management and process re-engineering.