Accessing big-gun analytics

StatPro Revolution is an affordable cloud-based portfolio analytics platform that is coming of age. Whether you are calculating value at risk for a portfolio, examining the influence of exponential weighting — and how cyclical tendencies exacerbate it — or, more likely, doing something a bit more mundane and pedestrian, such as generating a client-side report on general performance, this application could fill a void. And now, after more than a year in beta, it is generally available. At $100 per portfolio per month, it's a comparatively inexpensive solution for those financial advisers who also are active managers of client portfolios and want to have big-gun analytics at their beck and call. “I was using spreadsheets and calculating everything in-house,” said Robert M. Regan Jr., managing principal of Regan Investments Inc., a registered investment advisory firm that manages $75 million in assets. That required a lot of man-hours, especially when it came to carrying out what can be complex calculations on a portfolio, such as various measures of volatility that advisers use, including standard deviation. “My favorite is the Sortino ratio, because it does not penalize you for upside volatility,” Mr. Regan said. Regan Investments describes itself as a top-down investment manager focused on absolute returns that invests in a broad spectrum of asset classes, including stocks and bonds (foreign and domestic), commodities (including gold), currencies and money market funds. That requires the firm to concentrate on forecasting how global macroeconomic and political events will affect the valuations of the various financial instruments it uses. That, in turn, requires a good bit of calculation and measurement. Mr. Regan has one portfolio on the system: the firm's primary investment strategy, called “Macro Ab-solute Return.” He plans to add the firm's other three strategies soon. “We use Revolution mainly for our internal composites, but I could definitely see adding larger client portfolios as an added benefit,”Mr. Regan said. “I think there is tremendous value in being able to show a client their individual portfolio analytics.”

ADDED BENEFIT

With Revolution, Mr. Regan now can generate reports in seconds — whether value at risk or pure performance — and hand them over to clients or prospects immediately. He said that having such capabilities also is important when it comes to expanding the firm's business. “As we go to seeking more institutional prospects, being able to show we can carry out those calculations can be very important,” Mr. Regan said. Advisers using Revolution can share, without additional charge, portfolios they have created within the program as a model with as many as 100 people, whether they are fellow RIAs or end-clients. In addition to cost savings, the ease of use, attractive and easy to generate reports, the availability of almost 24/7 support and the extensive amount of real-time and historic market data on the system are important to Mr. Regan. “For me, entering in a bond we bought five years ago by CUSIP and getting data on it is something we cannot do on any other products we use,” including tools available from the firm's three custodians — Fidelity Institutional Wealth Services, Schwab Advisor Services and TD Ameritrade Institutional, he said. Andrew Peddar, chief executive for North America at StatPro Group PLC, said that in the sales process, the typical products that his firm comes up against are those of much larger companies and often are more complex than RIAs need. These include terminal-based products such as the Alpha product from Bloomberg LP and offerings from FactSet Research Systems Inc.

ADDING RIA CLIENTS

Since I first wrote about StatPro Revolution last year, the company has landed several RIAs as clients and it is being resold to others — for example, through RBC Dexia Investor Services (a joint venture between the Royal Bank of Canada and European financial services conglomerate Dexia Group) to advisers in Europe and North America. Although StatPro might not be a household name to U.S. advisers, the London-based company has been around for 17 years and has 200 employees. It also has a global footprint, with employees in Asia, Canada, Europe and the United States. Although the Revolution product focuses on RIAs and asset managers (it has about 200 clients in all, I am told), StatPro's even more sophisticated and institutional-focused platform offering, StatPro Seven, was released about a decade ago and has been updated regularly. Revolution will be overkill for firms that don't actively manage their client assets, but as more firms move to this model in order to expand their revenue, it will certainly make the short list of analytics providers that advisers should look at. Email Davis Janowski at djanowski@investmentnews.com Related stories: Technology helps advisers tap insight on global scale (HiddenLevers Part 1) A bit more on how the HiddenLevers core model works (HiddenLevers Part 2) MacroRisk Analytics online app lets you screen stocks for reaction to economic factors A simple SMA analytics tool for financial advisers (Zephyr) StatPro rolls out public beta of Revolution portfolio analytics software Markov Processes Stylus Web, plan-level reporting tool Zephyr Associates rolls out new product