Category: Portfolio Management Systems


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It is that time again – Spring.  For the moment, the sun is out here in Massachusetts and the birds are chirping away.  Spring means that yet another version of APX has been released.  Though APX releases are frequent, APX users tend to upgrade when it makes sense for their firm and not necessarily the moment a new version is released.

As a result of these frequent updates, there are a wide variety of APX versions in use today.  You might find someone running APX 3.x and someone else running APX 18.x.  Years ago, Advent changed their release naming convention to align with the years.  Since that point they do two new releases per year – one in April and one in October.  This year will see APX 19.1 and 19.2 released.

Advent tried to do the same thing with Axys, but as far as I can tell they were never able to get a large number of users to adopt the to the newer versions that they released.  As a result, you will find Axys users typically on a version somewhere between Axys 3.7 and Axys 3.8.7.  Axys 3.7 was released a long, long time ago; Axys version 3.8.7 just came out in the past six months.  Most Axys users should now be on version 3.8.6 or 3.8.7, but I wouldn’t be surprised to see Axys users still running 3.8.5.

Over the years I have spent consulting to Advent customers, I have seen many Axys users make the switch to APX.  Users moving from Axys to APX usually do so at a significant immediate and ongoing incremental expense.  For some firms the migration to APX it is a natural progression that can complement an aggressive budgetary commitment to technology that includes employees or contractors with the skills and experience to take advantage of the SQL back end.

For other firms, moving to APX could be a waste of time and money – given their needs and the level of commitment they are willing to make to retain the technical expertise necessary to take advantage of the enterprise features inherent in APX.

While adding SQL to the mix, APX also adds a layer of complexities that typically includes multiple servers as well as individual user rights to datasets and applications.  These added complexities can ratchet up the difficultly level to a point where IT and operations staff need to work together to resolve APX issues more frequently.

In short, APX isn’t for everyone.  As such, it should come as no surprise that some firms that have made the switch regret it and approach me seeking a way back to Axys.  Users that want to go back to Axys definitely can, but the process can be somewhat challenging.

 

Advent APX to Axys Conversion

 

In order to convert from APX back to Axys you need to do the following:

 

  1. Get an Axys license if you need one.

If you have a recent Axys license that doesn’t expire and you aren’t going to be using Advent’s support resources you may not feel that you need a license, but if you are planning on using Axys long-term it may be wise to update your license and sign an ongoing support agreement for Axys.  Windows 10 is an ever-changing operating system.  Without an ongoing Advent maintenance agreement, I would be concerned that future Windows 10 updates may make break Axys and eventually require patches from Advent to continue working in Windows 10.

 

  1. Export from APX

Using IMEX, export everything you can to Axys 3 format: prices, portfolios, splits, security information, sectors, industries, asset classes, indexes, composites et cetera.  Many of these files can then be imported back into Axys with very little work.  However, you will run into at least two problems that require additional work: performance history and portfolios.  Depending on what version of APX you are using, trying to export performance history via IMEX that you want to import back into Axys will lead to frustration.

 

  1. Performance History

Use the Performance Extract Report under the performance section of APX reports to build gross of fees (PBF) and net of fees (PRF) files that are compatible with Axys 3. Once these files are exported, they can be easily imported into Axys again.

 

  1. Portfolios

As with any conversion to a different portfolio management system, a decision needs to be made regarding transaction history.  It is far easier to simply go forward in time without transaction history, but usually less desirable from management’s perspective.  Though you can export portfolios using IMEX, Axys doesn’t let you import portfolio (CLI) files.  Every transaction that goes into a portfolio needs to go through the trade blotter.  This limitation may seem arbitrary, but it ensures that any record posted through the trade blotter is also stored in the audit trail (didpost.aud) file for record keeping purposes.

 

In order to import your portfolios, you’ll need to map the transactions from the exported CLI file to the trade blotter format.  That is usually where someone like me gets involved.  I have created a tool that I use as a template to get started with the process.  The tool takes portfolio (CLI) files exported from APX and builds an Axys trade blotter (topost.trn) from those portfolios.   However, that tool only works with the transaction mappings that have already been created.  Working with another firm’s data and unique transactions usually requires additional coding to map new and/or unique transaction types.

Please note, reconstructing tax lots to match your original files can be difficult, so the endeavor of converting historical transactions from APX to Axys shouldn’t be taken on lightly, but It is certainly possible for those that decide it is important enough to merit the extra work and cost involved.

In addition, readers should note that converting from APX to back to Axys seems fairly uncommon to me.   A large part of the costs associated with moving to APX are sunk costs, so converting back to Axys only helps with the ongoing cost.  However, the ongoing cost of APX can be prohibitive.

It is worth mentioning that there is also more than one way to get APX and the cost of these APX implementations can vary significantly.  Cost alone should not drive APX users back to Axys.

Advent users can elect to:

  1. self-host APX in their local environment
  2. have APX hosted by a service provider that is not Advent
  3. have APX hosted by Advent in a dedicated environment
  4. have APX hosted by Advent in a multi-tenant environment.

With respect to cost, I believe having APX hosted by Advent in a multi-tenant environment is the least expensive option, but it can also severely limit what users can and cannot do within their shared APX environment.  Likewise, having APX hosted by Advent in a dedicated environment can be complicated by Advent’s oversight and rules to what you can do in your own “dedicated” environment.  Given these limitations, my personal preference for APX is to host it in a local environment or with a service provider that is not Advent.

 


About the Author: Kevin Shea is the Founder and Principal Kevin Shea Impact 2010Consultant of Quartare; Quartare provides a wide variety of technology solutions to investment advisors nationwide.

For details, please visit Quartare.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@quartare.com.

Bull_20140121-winter-SamiraBouaou-2329-676x450A relatively predictable bull market doesn’t pose significant challenges to investment managers short of making the best possible investments.  Assuming one has embraced a decent platform and mission-critical systems are in order, investment managers don’t need to think too hard about reporting or much else during a boom.  Investment management firms are money-making machines, and in a bull market, most tend to do that well.

When markets and returns are kind, client reporting doesn’t get much scrutiny.  This is a point exemplified by the fact that during these times some clients don’t even bother to open up their statements.  In more challenging times, client reporting gets a level of attention that has the potential to be bad for business.  And yes, I know – even during those times – there are still clients that don’t look at their statements.

Over the years, report designers like myself have created a number of dazzling client reports that can look … well … not so dazzling when returns approach zero, or worse, become negative.  In the design process, most of the time is spent looking at accounts that paint a pretty picture.  Those are the accounts that get used in sample reports, so it shouldn’t be surprising when investment managers see how ugly an account with poor performance can appear.

A survivor bias naturally minimizes any attention these accounts might receive, but in the meantime, those reporting on accounts with sub-zero performance need to make decisions like “Should we show the floor of the graph when the account is negative?” and other presentation details that most investors would rather not contemplate.

No one I have worked with says, “We want our bad performance to look good.”  They just don’t want it to look any worse than it actually is.  Though some of the changes we make to reports are purely cosmetic, most of the report enhancements we implement are designed with one thing in mind: presenting performance fairly.

Some specific examples of modifications we have made include:

  1. creating a truly representative custom index for each account
  2. producing comparative index returns and risk
  3. isolating managed asset class and sector returns to produce select time period performance
  4. providing comprehensive performance summary reports that help the clients of investment firms put occasional anomalies in perspective

 

Flashback to Q1 2016 

Coming off a relatively flat 2015, traditional investors were likely dismayed to see double-digit negative returns just two weeks into 2016.  Since many of these same investors were drafting their investment commentaries explaining the past quarter, calendar year 2015, and the outlook for 2016 (ahem), these market conditions likely spurred some very focused thought about existing client reports and how they might look next quarter based on January’s performance to date.

2016-Q1

As a result of this come-to-Jesus moment, my phone was ringing more than usual.  In January of 2016, I fielded a number of calls from firms in a few different countries and across the US.  In almost every case, decision-makers were ready to pull the trigger.  They wanted new reports and they wanted them done quickly.

Investors planning on replacing their platform with a higher-cost alternative that ultimately might address the shortcomings of existing client reports may have reconsidered those decisions for the immediate future due to concerns over time to implement, predictability and increased costs.  I have made the point in the past and I’ll make it again here: it is typically much easier to replace your reports than your portfolio accounting system.

In simple terms, it generally takes hours, days or weeks to create new reports for Axys and APX users regardless of the content.  In contrast, the time required to change your portfolio accounting system in order to leverage pre-existing reports or make new reports on a different platform is more likely three to six months.  In some cases, investors that switch to another portfolio accounting system with new reports in mind find that they still don’t have those reports a year later.

These fundamental truths along with market conditions no doubt led investors that use Advent Software products to seek out and retain the expertise of replang and SSRS report designers like me to create and implement a variety of new performance reports designed to address concerns about their existing performance reports.

In my own experience, one prospect provided me with the specifications for their new performance summary report and requested that the report be done in a week.  In another instance, I was tasked with facilitating a reclassification of securities, regeneration of performance history, and creation of a new performance report based on the reclassification before the end of January.  In each of these engagements, working as a team with responsive and motivated clients, we were able to start and complete large-scale, high-impact projects in an accelerated time frame.

As a seasoned professional services consultant, I do my best to address the needs of my retainer clients – that keep me in business – first and any new prospects second, so these non-retainer clients were fortunate that I was able and willing to commit to projects that required fast tracking on short notice.  Though I regularly take on new projects, the most interesting thing about that quarter’s new business was the timeline imposed.

There was definitely a sense of urgency associated with these reporting projects that usually isn’t there, and though consultants like me appreciate new business opportunities, investment managers cannot usually expect those results if they haven’t forged a relationship with a consultant ahead of time.

With an established, highly-motivated expert on retainer, you can call that person on impulse, have a high-level conversation in minutes with someone that is familiar with your systems, get a responsive quote for additional work if necessary, and potentially have a new report or automation created before you might be able to effectively start a dialog or get an adequate response from an alternative source.

When the financial markets take a turn for the worse, one might assume that folks like myself who make a living off of providing software products, custom reporting solutions and consulting services aimed at automating and integrating investment management systems would suffer a downturn in business.

While that is ultimately true, should the market ever become so difficult that my customers become distressed or go out of business, it is not true of “corrections” that occur in the market.  These events force the hand of investors – making them scramble to take stock of reporting, trading and any other systems that their businesses rely on with an aim to enhance, automate and improve.

The best run investment firms are constantly striving to improve their mission-critical systems and willing to retain the talent that empowers them to make changes to those systems whenever it becomes necessary or advantageous.

Investors dodged a bullet in Q1 of 2016, but doing so in the future may require changes to your client reports. I am hopeful that 2019 will be another banner year for investors, but sooner or later something is bound to change.


About the Author: Kevin Shea is the Founder and Principal Kevin Shea Impact 2010Consultant of Quartare; Quartare provides a wide variety of technology solutions to investment advisors nationwide. For details, please visit Quartare.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@quartare.com.

Axys 3.8.7 is Here

ks_leaf_smallIt is that time again… Advent has released a newer version of Axys 3.8.x.  Those of us that looked at the Advent Product Support Matrix distributed a couple years ago with a certain level of trepidation can take a deep breath since we now have a clear replacement to those versions that were once aggressively scheduled for various decreasing levels of support.

A couple of weeks ago, we installed Axys 3.8.7 at one of my client sites and had no problems whatsoever with the upgrade. My client was running Windows 7 (SP1) on their workstations and Windows Server 2012 R2 on their server hosting Axys. Though my experience to date with the latest version of Axys has been somewhat limited to reviewing the new features, installing the product, and confirming that the automation and integration we created for Axys 3.8.6 still worked, it seems to be a solid update.

A quick summary of new functionality

Axys 3.8.7 adds the following reports and capabilities:

  1. Expanded report functionality related to reconciliation
  2. The Reallocate Dividends Tool (which was previously a custom report)
  3. Currency Exposure with Market Value by Asset Class (412.rep)
  4. Country Exposure with Market Value by Asset Class (413.rep)
  5. Performance History by Region (653.rep)
  6. The ability to open aud and trn files from the Axys file open interface
  7. Mouse scroll capability in certain files
  8. Enhanced Generic Date Variables.  In the past, these variables – like {edlm} or {last} – have been easy enough to remember or figure out.  There are a number of new generic dates values, and you will need to refer to the documentation to figure them all out.

This update also introduces the following additional optional periods to the Performance History for Selected Periods Report:

  • Day to Date
  • Fiscal Quarter to Date
  • Latest 3 Months
  • Latest 6 Months
  • Latest 9 Months
  • Fiscal Year to Date
  • Latest 2 Years
  • Latest 7 Years
  • Latest 10 Years
  • Latest 15 Years
  • Latest 20 Years
  • Latest 25 Years

The Performance History for Selected Periods Report has never been difficult for me to modify so that it includes the reporting periods users desire, but these updates will make required customization to this report a less frequent request.

Advent also claims to have “improved the accuracy of multicurrency calculations when a transaction causes the balance of a cash account to cross zero.”

Some minor complications related to Windows 10

Oddly, older versions of Windows 10 (v1709 aka Fall Creators Update and v1607 aka Anniversary Update) are considered compatible with Axys 3.8.6 and certain newer versions of Windows 10 (v1809 aka October 2018 Update or v1804 aka April 2018 Update) are reportedly compatible with Axys 3.8.7.  Yes.  You read that correctly.  Axys 3.8.7 actually seems to drop support for some of the previous versions of Windows 10.

This is a marked change from the usual support tendencies.  Typically, more recent versions of an operating system would be supported and older operating systems might be dropped.  In this instance, Axys 3.8.7 continues to support Windows 7 (SP1) and Windows 8.1, but drops support for certain older versions of Windows 10 that it originally supported in Axys 3.8.6.  I can’t say whether Axys 3.8.7 literally won’t work with the older versions of Windows 10.  Perhaps Advent has just decided to limit support to the newest versions of Windows 10 in order to reduce the complexity of supporting Axys 3.8.7 on Windows 10.  It could also be that, due to the way most versions of Windows 10 eventually force their updates to occur, users are unlikely to be running these older versions any longer.

Summing it up

None of these improvements are earth-shaking in and of themselves, but altogether, the updates reflect an effort to make substantial overall changes.  I, for one, appreciate these incremental improvements and hope the trend continues in future versions of Axys.

Advent’s documentation “strongly recommends that you install its products (and any upgrades and updates) with the assistance of a consultant from Advent’s professional services organization”, but if you have regularly installed Axys and its companion products in the past, you shouldn’t have a problem with this update either.


About the Author: Kevin Shea is the Founder and Principal Kevin Shea Impact 2010Consultant of Quartare; Quartare provides a wide variety of technology solutions to investment advisors nationwide.

For details, please visit Quartare.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@quartare.com.

iStock_000000129907XSmallIn my experience working with investors across the nation both small and large, there is at least one recurring theme.  Their sophisticated workflows hinge on semi-automatic processes that rely in part or completely on people.  I suppose that is a good thing when operator oversight is a plus, but when I get involved most of these firms have realized that they literally want to push a button and have things done as simply, quickly and reliably as possible.

Ten years ago, one of my clients experienced organic growth so rapid that it drove their firm from one that managed hundreds of millions to billions in assets in less than two years. While investment managers are known to consistently take pains to build processes that allow their businesses to scale efficiently, explosive growth can strain or disrupt established workflows.

In this case, the effect of the growth was dramatic. It demanded that certain processes be automated. One of the most important processes was related to trading foreign stocks in local currencies.  The influx of trades from new business was overwhelming.  Back-office employees that were already working hard needed to work even longer hours to keep pace with the incoming business.

More specifically, the firm’s back office needed to manually enter both transactions to trade currencies and the associated equity trades. In the multi-currency version of Axys, purchases and sales of foreign stocks in local currency require three transactions: two to exchange the currency and one to buy or sell the security.  As a result, every purchase or sale required two additional transactions related to foreign currency exchange.  They were entering three manual transactions in the trade blotter for every trade they made – even partial fills of an outstanding order required these transactions.  The entries to the trade blotter were tedious, time-consuming, and a potential source of operator error; the firm knew they needed to automate them.


Money concept

Understanding the Required Workflows

As part of their process, the firm waited until they got the executed FX rates from an assortment of brokers before they could enter the corresponding trades and post them in their portfolio accounting system.  This backlog of trades created a slew of manual trade blotter work that ultimately had to be done after hours to make sure the firm was ready to trade the next day.

A homegrown Order Management System (OMS) populated the Axys trade blotters of the traders at the company with open trades. Those blotters were utilized to track open trades and never actually posted.  Once the execution info was reported, our automation needed to create the additional transactions that back-office staff was entering manually. The workflow also required that the trade blotters for individual traders be updated to reflect that the executed trades were no longer part of the open trades. In effect, our automation needed to rewrite the traders’ blotters as well as the trade blotter of the operations employee running the app and post the latter.


Building the Prototype/v1

In a relatively quick timeframe (40 hours), we built a working prototype using Visual Basic that:

  1. loaded the outstanding trades from each trader’s blotter into an Access database
  2. created a process where outstanding trades could be selected and associated with trade execution info to generate the required trade blotter entries
  3. imported executed trades to the trade blotter for review and posting
  4. updated the open positions in the trader’s blotters
  5. produced reports (via Crystal Reports) detailing trades pending and actual execution info

In short, the app pulled pending transactions from their homegrown OMS and allowed users to associate foreign currency execution rates and other specifics of trade execution with specific orders to produce the necessary Axys trade blotter transactions automatically.  Once the execution info was recorded, the user would exit the app, which in turn automatically updated the user’s trade blotter and the traders’ blotters.

Version 2

The next version of the app was under development for over six months and cost nearly 40k, but it met the needs of the firm. The core functionality of v1 with respect to workflow was preserved, but we added many features.  In terms of the initial cost, v2 was expensive, but over a period of nearly ten years it required almost no maintenance. The multi-currency trade automation solved an immediate and urgent need when it was originally developed, and continued to save the firm hours of back office processing work every week for nearly ten years, until it was finally decommissioned in 2015 as a byproduct of the firm’s transition to Moxy and Geneva.

Though the application wasn’t cheap to build or maintain initially, it paid for itself many times over during its tenure as an integral part of the daily workflow at firm that knows the value of automation.


About the Author: Kevin Shea is the Founder and Principal Kevin Shea Impact 2010Consultant of Quartare; Quartare provides a wide variety of technology solutions to investment advisors nationwide. For details, please visit Quartare.com, contact Kevin Shea via phone at 617-720-3400 x202 or e-mail at kshea@quartare.com.