Swedish pension funds AP3 and AP4 have chosen SimCorp as their new provider of a portfolio management system.

Following a public procurement process and an analysis of 13 applications, the pension funds have signed a front-to-back SaaS service agreement with SimCorp, covering the entire investment management value chain.

AP3 and AP4 were looking for a dynamic system architecture with more automated processes and a reduced number of separate systems.

As part of their aim to streamline the technical infrastructure, the two funds performed a feasibility study in 2019 to explore what the market could offer in terms of a front-to-back buy-side asset management solutions that can cover requirements and needs for several business areas.

“To be a world-class asset manager, we must ensure efficient processes across the entire organisation, qualitative and timely data for analysis and the ability to adjust to changing conditions internally or externally,” commented AP3 CFO and CRO, Eva Boric.

“Our previous more complex infrastructure was not fit for future purpose. A handful of best-of-breed systems will be replaced which will reduce the complexity in system management and increase our operational efficiency.”

The system will be based on a data-centric architecture, which SimCorp said was foundational to long-term success in uncertain markets.

AP4 head of risk & performance, Nicklas Wikström, said it was important for the portfolio management system to contain an integrated Investment Book of Record (IBOR) and an end of day holding in the Accounting Book of Record (ABOR).

“Our ambition is to replace a number of old existing systems with a comprehensive solution to achieve a flexible and appropriate system support where we can more quickly and efficiently meet changing needs from both the business and the outside world,” he added.

AP3 and AP4 have 32 and 15 per cent of their portfolios invested into unlisted assets, respectively. It was therefore also important with good functionality for alternative investments, performance, and risk with the possibility of obtaining an overall picture of the total portfolio in one and the same system.

SimCorp and its partner Axioma will jointly provide the holistic total portfolio risk overview across public and private assets to ensure the total portfolio view.

“Our new portfolio management system solution is expected to lead to shorter time to even better-informed analyses and investment decisions,” said Wikström.

“Through reduced complexity in system infrastructure and management, the operational risks in AP4’s central business processes are also reduced.”

Several key objectives were set for the procurement process, including a standardised, flexible, and scalable system solution that is cloud-based and where IT operations and system maintenance are managed by the vendor.

This delivery model where the vendor delivers the financial technology Software as SaaS allows investment managers to truly focus on their core business rather than deal with operational IT issues, such as installing, configuring, upgrading, and running software.

“We take great pride in our new long-term partnership with AP3 and AP4,” commented SimCorp managing director EMEA, Ralf Schmücker.

“The strength of the SimCorp platform combined with Axioma’s risk management solutions will allow AP3 and AP4 to future-proof their investment management operations.

"In addition, our front office and alternative investments solutions will provide AP3 and AP4's portfolio managers with a consolidated overview across all asset classes and enable them to execute their investment decisions quickly and confidently.

“Delivering our investment management platform through our SaaS platform empowers AP3 and AP4 to streamline their operations by using the latest advancements in automated processes, thereby enhancing their operational efficiency."

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