Sovereign Wealth Funds Make Increasing Use of Enterprise Technology

John Legrand, Managing Director, Head of EMEA/APAC, Eagle Investment Systems

In my position, I am fortunate to have a view across many markets within the EMEA and APAC regions. This affords me great insight into how the investment landscape varies between geographies. A trend I have seen over the past three years in the Asia-Pacific and the Middle East markets is an increased interest in our products coming from sovereign wealth funds, central banks and other publicly managed money pools (e.g. pension funds).

At Eagle, we have worked with government structures such as pension funds for years, but direct interest from sovereign wealth funds is a relatively new occurrence. A number of governments in these regions have seen significant growth in their foreign reserve pool and it seems that they are looking to broaden the diversification of their assets. Where these organizations would historically have mandated external money managers, focusing on wealth preservation, they are now increasingly looking to invest their significant cash holdings.

There are a number of challenges facing these organizations as they move towards a direct investment approach. Firstly, the investments they are looking to make can be huge and carry a high concentration of risk. Understanding and assessing these investments and their overall risk profile is therefore vitally important. They also have different governance structures than private investors, with stakeholders ranging from civil servants to government officials. Consequently, visibility of investment performance takes on a new significance.

Technological solutions, such as those that Eagle provides, are important facilitators for helping these organizations as they look to invest directly. These institutions tend to have two key requirements. The first is operational and reference data management, in order to assess their risks, while the second is performance measurement and the ability to drill down into the attributes of their investments. For these investors, the absolute priority is reliability; not only of the product itself, but also of the provider. Thus we have seen due diligence from these institutions to be very stringent. Our commitment to long-term relationships and the reliability of our firm and products make us a top choice for sovereign wealth managers as well as our large base of non-government clients, over a quarter of whom we have worked with for more than 10 years.

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