PBOR – One Year On

A year after the concept of the Performance Book of Record was introduced, Rich Mailhos takes a look at its role in the global asset management industry now and in the future

Rich Mailhos, Product Manager, Eagle Performance


The Emergence of PBOR
It is nearly a year since the concept of a Performance Book of Record (PBOR) emerged from a research study we conducted in conjunction with WatersTechnology. The study highlighted the shortcomings among investment management companies when it comes to generating accurate and transparent performance and risk analysis across the enterprise and the need for a specialized solution to address these challenges.

Only 21% of the companies surveyed were very satisfied with their ability to access timely, accurate and relevant performance data with the overwhelming majority (72%) having to use multiple systems to aggregate their investment and performance data for management and client reporting.

The study started an important industry dialogue about the growing need for enterprise-level performance and risk reporting which has continued and intensified over the course of the year. It also appears to have, by reference, helped crystalize the industry’s thinking about the Investment Book of Record (IBOR), when it is appropriate and what its limitations are. Rather than a panacea, IBOR is one part of a solution to a more fundamental set of challenges facing the industry.

PBOR in the Industry
The early signs are that PBOR is catching on: It is being debated at industry forums, has featured in conference presentations and is talked about by our peers. This does not surprise me. From the ongoing conversations I have with our clients and prospects, it is clear that the challenges they are facing and the business objectives being set are only increasing the relevance of a PBOR solution.

Over the last 12 months, there have been a number emerging challenges that PBOR could help address, including:

  • Mitigate operational risks of managing asset exposures across systems
  • Calculating rates of return across all asset classes
  • Calculating performance across multiple business lines with discrete measurement requirements
  • Being able to achieve look-through into sub-advised investments
  • Achieving and maintaining fund compliance
  • Meeting increasing regulatory pressure for timely, accurate and detailed reporting
  • Meeting client expectations when it comes to accuracy, immediacy and rigor of security level performance analysis

It is not just these challenges that have stirred up interest in PBOR but also there is growing recognition of the opportunities such a solution presents. Firms are increasingly realizing that a PBOR can help drive better cost management and free up value-add analyst resources.

The Future of PBOR
These same trends look certain to continue determining the course the industry takes in 2016 and beyond, with intense pressures on investment risk profiles and increasing regulatory demands for advanced analytic measures such as stress testing and Value at Risk across a firm’s entire book of assets. The pressures facing businesses plus the potential benefits and applications for enterprise-level risk and performance measurement solutions look certain to fuel the move towards PBOR.

On December 15th, I will be participating in a webcast that Eagle is sponsoring with WatersTechnology titled PBOR: Addressing the Evolving Performance and Risk Needs of the Front Office. Please join us to learn more.

To sign up, go to: http://www.workcast.com/register?pak=9889161620902010.

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