The October issue of Crane Data's Money Fund Intelligence newsletter in its latest "Fund Profile" features a major player in the "portal" space. We discuss the online money market fund trading business and recent developments with VP Vince Tolve and COO Bob Ward of SunGard's wealth management business. Our Q&A follows.
MFI: How long has SunGard been in the money fund "portal" business? Ward: SunGard entered the business when it acquired one of the first money fund portals back in November of 2002. SunGard's Short-Term Cash Management portal is part of the SunGard Global Network (SGN), which resides in the Financial Services business.
Tolve: Our Short-Term Cash Management portal has grown to become one of the largest platforms in terms of assets both here in the US and abroad. By adding resources in Europe and Asia, we have expanded the portal's international footprint. SGN now services investors on multiple continents in money funds denominated in seven major currencies.
MFI: How much does the company currently distribute in MMFs? Ward: In U.S. Dollar terms, our money market fund platform assets have consistently averaged more than $100 billion in total money fund assets for most of 2011, which includes our non-USD denominated funds. Our trade volume in Q3 2011 in USD terms has more than doubled since Q3 2007 with over $642 billion traded in Q3 2011 alone. We're on pace to surpass more than $2 trillion traded in calendar year 2011.
Tolve: The SGN Short-Term Cash Management portal was first launched in the U.S., so naturally domestic funds make up the lion's share of the assets at about 70% of the total. Prime funds remain the most popular by a significant margin with about 20% of our assets invested in Treasury and Government funds combined.
MFI: How many funds and fund families are on the platform? Ward: We currently service more than 350 funds from more than 50 fund complexes globally.
MFI: Tell us about the new enhancements. Ward: When SunGard first entered the portal space nearly a decade ago, institutional investor's needs were quite different. Customers were looking for automation, aggregation and improved operational efficiency, such as integration with treasury management systems. These portal benefits are still very important today, but now customers also need tools to help them manage investment risk, increase counterparty transparency, and remain compliant with their investment policies. This is where we have been investing our development resources recently.
Tolve: One positive result of the 2007-2008 credit crisis is that money market funds are much more transparent, disclosing their portfolio holdings information at least monthly. This has enabled SGN to consolidate this portfolio composition data into one master database for customers. We are also working with external data providers to enrich the portfolio data to help our customers view their aggregated exposure to data points like issuer and sovereign credit rating, counterparty, ultimate parent, country of domicile, security type, and security term.
Tolve: Before solutions like SGN, money market fund investors had to evaluate risk at the fund level with little visibility into underlying holdings. If they wanted to dig deeper, they had to gather the holdings manually, which was time-consuming and error-prone as the information was in different formats and limited to just few data elements. SGN is helping cash managers save time and manage headline risk efficiently, thereby freeing them up to focus on other important responsibilities.
Ward: With the first two phases of the SGN Short-Term Cash Management portal's credit risk analysis solution now in production, we will be launching a third phase of functionality in the coming weeks. This new release not only helps to improve our risk analysis capabilities, but also enhances our investment policy and compliance functionality. It will give customers the ability to build consolidated pie and bar graphs detailing portfolio composition by the data elements mentioned earlier. We are also rolling out updated controls to help enforce investment policy rules like share limits per fund, fund type, or fund family as well as percentage limits based on the funds total AUM or total portfolio. Many of these rules can be set up for pre- or post-trade validation with optional automated email alerts. Users also will be able to generate consolidated reports for auditors verifying compliance.
Look for more excerpts from our latest Q&A in coming days. Finally, note too that Crane Data provides Portfolio Holdings information to SunGard's portal.
