There is a mounting challenge facing the pension, endowment and foundation industries – how to transition from the legacy technologies that suited the past to a more holistic and agile platform that will meet current and future demands.
Combine the demands of increasingly sophisticated stakeholders, the growing need to blend outsourced and in-house investments, and the complexities of managing alternative investments such as private equity and hedge funds – and you have a perfect storm of forces propelling the industry to change. In this paper, fintech Solovis and pension fund UC Investments outline some fundamental considerations pensions and endowments must be aware of in order transform their technology, data and process infrastructure to address these forces head-on.
Recognizing that the status quo was not going to enable the growth and sustainability desired, key operations and risk personnel for UC Investments took a unique and arguably, revolutionary perspective to their information problem. Arthur Guimaraes, COO of UC Investments, posed the question: “If we started from scratch today, given everything we know about computing, the cloud, calculations, business intelligence and other modernizations available to us, how would we build the operational backbone of a $125 billion investment office that would best support the investment and philanthropic mission of the organization?”
- Create a data platform for all private assets (private equity, absolute return, real estate and real assets) that rolls up, along with public assets, to the total fund view.
- Streamline communication and information sharing across departments from front to back offices including risk, compliance, and reporting.
- Overhaul a legacy technology infrastructure that was costly and insufficient.
UC Investments oversees a $125 billion (at the time of this writing) multi-asset class portfolio for the University of California’s various investment products, including its endowment, pension, retirement savings plan and working capital. The portfolio spans both private and public assets, with a glide path to grow the proportion invested in alternatives. Solovis is a fintech providing institutional investors with a cloud-based platform for multi-asset class portfolio management, reporting and analytics uniquely designed for limited partners.
The paper presents key learnings, insights and fundamental considerations that other asset allocators can benefit from as both inspiration and justification for undertaking a technology, data and process transformation journey.