Financial markets are entering a new era—one marked by heightened uncertainty and volatility. While these challenges may unsettle some investors, shifting macroeconomic conditions could also create new opportunities for portfolio and investment managers.
Morningstar’s Active/Passive Barometer Report highlights that active investment managers have struggled to outperform their passive counterparts in recent years. In the year ahead, however, advisors and investors may allocate more to active strategies, particularly in segments with stronger historical performance.
In this post, we’ll explore the opportunities and challenges that today’s market environment presents for portfolio managers. We’ll also examine how the best technology for investment and portfolio management can help managers build investor trust, generate results, and strengthen investor confidence in a time of uncertainty.
A Return to Active Investment Strategies: The Pendulum Swings Again in Investment and Portfolio Management
Over the past two decades, shifting demand for active vs. passive strategies has reshaped investment and portfolio management time and time again.
In the early 2000s, active management dominated as portfolio managers sought to capitalize on market inefficiencies, volatility, and sector-specific opportunities.
However, in 2008, the financial crisis exposed weaknesses in many active strategies, as most managers struggled to shield their portfolios from severe drawdowns. In the aftermath, investors increasingly favored cost-efficient, transparent, and benchmark-driven strategies, signaling a rise in passive investing.
In the years that followed, the rise of index funds and ETFs—coupled with data highlighting the underperformance of many retail and institutional accounts after fees—sustained capital allocation toward passive investments.
Today, the pendulum is swinging back.
With high interest rates, greater return dispersion, and heightened market volatility, investor priorities are again shifting toward active strategies that can adapt, manage risk, and uncover undervalued opportunities.
By quickly identifying opportunities and managing risk effectively in fast-moving markets, active investment and portfolio managers are positioned to respond to these market shifts.
The Best Technology for Investment and Portfolio Management: 6 Essential Features to Optimize Active Investment Strategies
To meet investor and market demands associated with active investment strategies, firms must adopt modern portfolio management technology.
Here are 6 must-have features to look for when searching for the best technology for investment and portfolio management in an active market:
Advanced Portfolio Construction and Modeling Tools to Align Strategies with Investor Goals
As portfolio managers strive to maximize returns and manage risks of their active strategies, they increasingly turn to the advanced portfolio construction and modeling tools found in modern portfolio management technology.
These tools enable managers to identify optimal asset allocations tailored to client needs, ensuring the strategic and personalized approach investors want from their active strategy – even when the market is moving fast.
For example, "what-if" analysis capabilities let managers quickly simulate the impact of market scenarios, policy changes, or economic events while rebalancing simulations help them dynamically adjust portfolios in response to market fluctuations.
Moreover, modern portfolio management platforms enable flexible modeling across asset classes, including equities, fixed income, and derivatives—allowing managers to align active strategies with diverse investor goals.
Order Management Features That Speed Up Processes
As the name implies, active strategies require portfolio and investment managers to quickly respond to changing market trends. Failing to act swiftly can lead to missed opportunities and erode investor trust.
To stay competitive, portfolio managers need technology that simplifies and accelerates the order creation process. The right order management tools can optimize investment activity across all asset classes, offering intelligent trading workflows and advanced allocation capabilities to support even the most complex strategies more efficiently.
These order management features empower portfolio and investment managers, giving them the confidence that their investment decisions will be orchestrated swiftly and accurately, helping them stay ahead of market movements and investor expectations.
Strategy Execution and Lifecycle Management That Supports Investor Confidence in Uncertain Markets
In 2008, as investors saw significant drawdowns in their portfolios, many began to question their managers' ability to respond quickly to market changes. This loss of confidence was one of the factors that led many investors to adopt—and remain committed to—passive investment strategies in the years following 2008.
Now, as market conditions again shift in favor of active investing, portfolio and investment managers must reassure investors that they can swiftly and effectively execute strategies while meeting performance expectations.
Technology that enables efficient strategy execution and lifecycle management is critical to achieving these outcomes. Portfolio managers should seek advanced solutions that seamlessly integrate with trading platforms, custodians, and other key systems. These integrations enhance performance attribution, reduce errors, and accelerate the flow of critical information.
Executing strategies with this level of speed and precision strengthens firms’ ability to deliver the results investors expect from their manager and their active strategies.
Real-Time Insights and Customizable Tools Mitigate Risk and Keep Investments on Track
In these changing markets, portfolio managers must constantly anticipate risk, optimize portfolios, and stay aligned with their investment goals. Portfolio management technology with real-time analytics and customizable risk management tools enable portfolio and investment managers to meet those demands.
Modern portfolio management technology should provide real-time insights into key metrics like P&L, exposure, and liquidity risks. These features allow managers to adjust their strategies quickly in response to market shifts.
Risk management tools, including pre-configured and customizable rule templates, streamline monitoring and mitigation. Alerts for critical events or regulatory breaches—such as compliance or exposure alerts—ensure managers stay compliant and maintain control over portfolio risks in fast-moving markets.
Data-Driven Decision Support to Identify Market Trends and Navigate Uncertainty
To deliver on the promise of their active strategies, portfolio managers need systems that enable data-driven decisions to enhance performance and reduce uncertainty.
These systems should provide more than surface-level insights—they must offer in-depth analyses that allow managers to dive into granular data and assess the impact of specific sectors, assets, or geopolitical events on their portfolios.
To achieve this level of insight, technology must consolidate data from multiple sources into unified views, giving managers a comprehensive perspective of their investments and helping them quickly identify trends or deviations that could affect performance.
Real-Time Insights and Connected Data to Meet Increased Investor Expectations
Investors in active strategies expect more than just performance reports; they want real-time insights into how portfolio managers are making decisions, responding to market shifts, and positioning their investments for future growth.
Understanding this level of investment performance—and keeping investors informed—requires portfolio management technology with robust performance reporting capabilities, including:
- Holistic, real-time portfolio views to analyze key metrics instantly.
- Seamless data connectivity to ensure a continuous flow of information into and out of the portfolio management system.
- Integration with third-party systems and services to enhance performance analysis and provide deeper insights into key performance drivers.
These capabilities enable portfolio and investment managers to provide accurate, timely information to clients, reinforcing trust and justifying the higher fees often associated with active management.
How Technology is Adapting to Meet the Changing Needs of Investment and Portfolio Management
SS&C's portfolio management solutions empower investment and portfolio managers to make, execute, and report the timely, informed investment decisions that are crucial to a successful active investment strategy.
From enhanced portfolio construction and modeling to improved risk management and trade execution, SS&C’s technology helps managers stay agile, adapt to changing markets, and stand out from the competition.
Learn how SS&C’s portfolio management solutions can support your active investment strategy. Or contact us for more information.
