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Category: News
COVID-19’s nationwide lockdowns have forced countless portfolio managers and financial advisors to work remotely – many for the first time – stretching the limits of fintech into a new, remote light. Portfolio managers’ portfolio construction and optimization technology are primarily from legacy providers that lack the agility to adapt to this new working environment.
At the same time, financial advisors face a period of heightening client communications that require an ability to display proposed fixed income portfolios to clients virtually. To support these portfolio managers and financial advisors during this turbulent time, the fintech is offering free consultations and trial period of its scalable portfolio construction platform. Bond IT is an independent portfolio construction technology provider for fixed income.
With BondIT, users remote-working can:
- assign and share investment portfolios across their businesses in any geography, enabling them to collaborate on ideas together and to re-route work, based on resource availability
- use intelligent algorithms to automate a manager’s process to rebalance or optimize portfolios, based on market changes, without the need for manual user inputs
- configure the BondIT system to run or adjust portfolios automatically based on manager-defined events or at set times throughout the day, creating an automated workflow that can review and optimize portfolios in step with the needs of managers and investors alike
- produce controlled client proposals and reports
Cybersecurity
Adrian Dixon head of Markets at Bond IT, added that the BondIT platform is deployed using a multi-tier architecture and makes use of a range of defense mechanisms in response to ever increasing range of cyber security threats.
The BondIT platform is a SaaS solution deployed within Amazon Web Services (AWS) underpinned by the secured AWS Relational Database System (RDS) with access control, Network Isolation and Firewalls. In addition there we have logical separation of the Database tier through the implementation of a trust-based micro-services architecture with separation of Portfolio and Client Data through unique instances of RDS.
Access to Portfolio and Client data is protected through the use of JSON Web Tokens which are issued via a separate Identity Access Management (IAM) component. Strict Access Control Lists (ACL’s) are defined and implemented across each of the Firewalls with backend components further governed and controlled for access via the use of AWS Virtual Private Cloud (VPC).
Finally, data transport and communication between layers is encrypted with all external data transfers required to use the HTTPS protocol.
BondIT offers optimization/automation freebie for portfolio managers working from home
NEW YORK, NY – MARCH 2, 2020 – BondIT, an independent portfolio construction technology provider for fixed income, today announced that Bob Guzman and Dan Taylor have joined as Head of Asset Management and Head of Client Solutions, respectively. They will join Andrew Merrill, Head of North America, in the New York office, and will report to Etai Ravid, CEO, in these newly created roles.
Since its product launch in 2018, BondIT has grown to support leading fixed income asset managers, with 35 employees worldwide. BondIT’s scalable portfolio construction platform is delivered via off-the-shelf web applications, API, and professional services. The platform fulfills the demands of portfolio managers (PMs) at large institutions for intuitive and efficient portfolio construction and analysis technology that mirrors the PM workflow, as well as the financial advisor’s demand for fixed income portfolio proposal generation that both simplifies and elevates advisor/client engagement around fixed income.
Bob Guzman joins BondIT from Blackrock, where he was Global Head of Risk Governance and Performance Oversight for the Client Solutions group. Before Blackrock, Guzman served as Global Head of Pension Risk Management at UBS Global Asset Management in New York and Chicago, and as Global Head of Liability-Driven Investing and Global Head of Derivatives at Aberdeen Asset Management in London (now Aberdeen Standard). In his new role as Head of Asset Management for BondIT, Guzman will oversee product strategy and development.
Dan Taylor joins from Aberdeen Standard Investments, where he was a longtime senior fixed income portfolio manager responsible for the structured credit sectors of institutional client portfolios. He later managed the team responsible for innovating product strategy and solutions across all public and private asset classes in the Americas. As Head of Client Solutions for BondIT, Taylor will work with portfolio management and advisory clients to translate their workflow requirements into product design enhancements.
“We are delighted to welcome Bob and Dan to the BondIT team,” said Etai Ravid, CEO of BondIT. “We are in the disruption era, and industry leaders are taking note. Bob and Dan’s move from Blackrock and Aberdeen join our most recent hires Adrian Dixon, the former Chief Information Officer of FIIG Securities and BondIT’s current Head of Markets, as well as Andrew Merrill, BondIT’s Head of North America, who joined us from JP Morgan. The incredible talent that we are attracting to our team is a testament to our technology, the hard work of our employees, as well as the growing industry demand for new players in the fixed income portfolio technology sector that we are fulfilling.”
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ABOUT BONDIT
BondIT is an independent portfolio construction technology provider for fixed income. Empowering today’s portfolio manager and financial advisor, BondIT’s scalable technology platform leverages machine learning and data science techniques to provide optimized portfolios and analysis without sacrificing flexibility. The platform allows for the seamless onboarding of internal models as well as downstream connectivity to existing portfolio management and trading systems. Further, BondIT is privately owned and data-agnostic, paving the way for financial institutions of all sizes to integrate via API’s and power their investment technologies. For more information, please visit www.bonditglobal.com.
MEDIA CONTACT
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Adrian Dixon, Head of Markets at BondIT, talks to TRADE TV at this year’s Fixed Income Leaders Summit about how firms can drive efficiencies in fixed income through the application of data and artificial intelligence technologies.
https://www.thetradenews.com/multimedia/bondit-driving-efficiencies-fixed-income-data-ai/
“It’s tough to build a modern successful business without good analytics, and prescriptive analytics is the linchpin that makes all the other models and analyses worth it… Machine learning models have enabled BondIT to custom tailor portfolios to each individual in minutes rather than days and have reduced risk by 30 percent while retaining similar earnings for clients.”
BondIT participated in the largest wealth management event of the year – In|Vest 2019: Innovations in Investing, Saving & Advice. In their presentation, Dr. Hillel Raz and Andrew Merrill spoke about the fixed income market, its challenges, and how BondIT is helping solve these issues.
BondIT provides market-leading solutions that help fixed income investors in the construction, optimization and management of their portfolios. BondIT’s mission is to bring efficiency to global markets through the application of artificial intelligence and data science, leading to faster, smarter portfolio construction, improved customer service and enhanced revenue. The BondIT platform is meant for RIA’s, portfolio managers, financial advisers and asset managers.
HERZLIYA, Israel, May 31, 2018 /PRNewswire/ — BondIT today announced that leading fixed income house, FIIG Securities, has signed an agreement to use its bond portfolio solution for relationship managers.
BondIT is a bond portfolio solution provider that empowers investment managers and advisors to create and optimise bespoke fixed income portfolios with sophisticated, yet easy-to-use tools powered by proprietary machine learning algorithms.
FIIG Securities is Australia’s leading fixed income house with over AUD 10 billion under investment. With offices in Sydney, Melbourne, Brisbane, Perth and Malta, FIIG’s team of over 140 employees provides service and support to over 6,000 clients across Australia.
To support the company’s substantial growth in the fixed income market, FIIG Securities will adopt BondIT across all front office users to bring efficiency to daily activities including new portfolio construction, investment idea generation, relative value analysis, portfolio monitoring and portfolio optimisation. BondIT will integrate with FIIG Securities’ core investment management platform, SimCorp Dimension, providing users with seamless access to all the information needed to provide an enhanced service to FIIG Securities’ growing client base.
Etai Ravid, CEO and founder, BondIT, comments: “Over the past year we’ve built a great working relationship with FIIG and are delighted with their decision to deploy our leading fixed income technology platform to support the growth of their business. FIIG recognises how new technologies are reshaping the investment industry, enabling businesses to scale and ultimately enhancing customer service. We are excited to partner with the team at FIIG to help them realise their growth ambitions.”
John Prickett, Chief Operating Officer, FIIG Securities added: “Demand for fixed income, and in particular corporate bonds, is on the rise with more and more investors realising the benefits of corporate bonds as part of a diversified portfolio. The BondIT software will further enhance our offering, pairing the knowledge of our expert team with the latest technology to identify more fixed income opportunities for our clients and help them maximise their investments.”
About FIIG Securities
FIIG Securities Limited, which is licensed by the Australian Securities & Investments Commission (ASIC), is Australia’slargest specialist fixed-income house.
FIIG has more than $10 billion in assets under advice in its short-term money market, bonds and custody business. The company has Offices in Sydney, Melbourne, Brisbane Perth and Malta. For more information about FIIG Securities please visit Error! Hyperlink reference not valid.
About BondIT
BondIT, headquartered in Herzliya, Israel, enables advisors and investment professionals to significantly boost their productivity and trade flows by automating the construction, monitoring, and management of optimised fixed income portfolios. BondIT provides sophisticated, yet easy-to-use, tools backed by proprietary machine learning algorithms, helping customers scale their business, increase productivity, and meet their regulatory and compliance requirements.
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A Case Study with IBM
In a case study with IBM, Dr. Hillel Raz and Dr. Eyal Kenig of BondIT described how technology is deployed to creates bespoke smart fixed-income portfolios in minutes to deliver greater value to investors.
“Our solution enables users to construct portfolios that are much more personalized to customers’ specific requirements, empowering them to invest more successfully. At the same time, the solution significantly cuts the time taken to create portfolios. Customers no longer have to wait weeks for investment recommendations—they can sit down with advisors for an hour and run through several portfolio options then and there.” — Dr. Eyal Kenig
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BondIT at Asian Financial Forum 2018
Donald Chan, Head of Asia from BondIT, spoke about BondIT’s latest technology application with on the panel discussion at Asian Financial Forum 2018.
Ultra-low interest rates, quantitative easing, and loose monetary policy – a collective global financial comfort blanket that has been soothing us for the best part of a decade. Well, nothing lasts forever, and as we see a change in the stance of major developed-world central banks and the expected tapering of their bond-buying operations, we inevitably begin to question what will happen to the patterns of performance and correlations between bond sectors.
So what happens now?
In an environment where monetary policy tightening, it usually pays to shorten duration, reducing the sensitivity of fixed income portfolios to changes in interest rates that are felt most keenly by longer-dated instruments.
Of course, it is equally important for investors to know what level of risk they are willing to tolerate and to consider their aversion to losses, as falling bond markets are likely as interest rates rise. As we speak, bond markets, like equities, appear stretched in terms of valuation, having endured a multi-year bull market.
With the long bull market in bonds at risk, investors and their advisers should be proactive in at least considering their options. Is there something that can help them model a portfolio fit to prosper in the changing environment?
Federal Funds Rate Options Implied Forecast and Federal Reserve’s Target Fed Funds Rate Forecast per Dot Plot
Source: Bloomberg, Federal Reserve and J.P. Morgan.
Note: Fed Funds options implied forecast as of 12/13/2017. Fed dot plot as of 12/13/2017 FOMC Statement.
Opportunity set (and match) in fixed income
From a global perspective, the six months to end June 2017 saw net new inflows to bond funds of US$440.6 billion compared with equities, which attracted US$207.2 billion [1]. These numbers underline the fact that many investors continue to see bonds as a fundamental element of a balanced portfolio, providing some ballast to their more volatile and risky equity cousins.
Partly for this reason, investors or their advisers may be tempted to see fixed income as a homogeneous group. While there is undoubted correlation running through the different sectors of the fixed income market, the reality is that it is comprised of separate parts that react and perform in distinctive ways – indeed they should be expected to play different roles within a portfolio. What relatively stable government bonds bring to the game is very different to that of an emerging market or high yield bond allocation, which can be expected to provide more alpha but be a more unpredictable ride.
This is a conundrum. It is easy enough to make allocations to different sectors within the bond universe; where investors and their advisers are less proficient is in picking the right combination of mutual funds and ETFs to reflect changing market conditions.
The result is often a diversified but relatively dysfunctional portfolio that does not necessarily chime with the end-investors’ objectives. Where specific bets might effectively cancel each other out and where risk (interest rate or credit risk) may be at more extreme levels than realised.
[1] Global Fund Market Statistics Report For June 2017 – Lipper Analysis
Don’t just react, interact
What, therefore, is the optimal combination of the varied sectors and parts of the fixed income market as interest rates rise? How does one go about constructing such a portfolio?
One of the critical difficulties for a bond investor is the fragmentation and huge amount of data facing them, as well as the plethora of instruments in the bond market. Added to that is the inefficiency and, on occasion, illiquidity of various parts of the market.
The danger is that client portfolios are doomed to become sub-optimal or, in other words, suffer from misallocation of capital or the inevitable drift that occurs in portfolios over time, whereby the objectives of the investor and the expected performance of the underlying assets gradually diverges. The simple reason for this is that markets do not stand still. What was the appropriate combination of holdings last month may not be entirely right next month, or even next week. It is cumbersome and time consuming to continually reassess and tweak holdings to realign the portfolio with one’s objectives. What to do?
Artificial intelligence and data science have evolved hugely over the past few years so that they can readily provide solutions across many industries, not least investment management.
Regarding speed, there are algorithmic solutions available that can efficiently do in seconds what an investor might spend many hours to achieve. The crucial element is the swift sifting and analysis of all relevant data in an all-seeing, dispassionate manner by the software. It is a practical shortcut to a customised, optimal portfolio, slicing through the noise and, all too often, opaque nature of bond markets.
Turning to objectivity, and a technology-based approach eradicates the mistakes and subjective biases of the human mind. Where an individual may have preferences, the machine has none. It constructs the portfolio based purely on impartial observations. It is through such technology that investors can take back control, avoiding the drift towards dysfunctional bond portfolios.
At BondIT, our team has developed an approach that offers bond portfolio optimisation based on an objective analysis of millions of data as well as observations of market behaviour. New data is continuously updated, so our system learns and evolves in real time, reassuring both investors and their advisors.
What’s more, we have the added benefit of detailed, real-time, user-friendly analytics, which can be hugely useful for advisers when discussing portfolios with their clients. It provides a boost to productivity and client experience.
Be prepared
Customisation is an essential element, with tailored portfolios being generated off a single platform. Such a tool allows for existing portfolios to be uploaded and adjusted in seconds and new ones created. BondIT aggregates market data and client input and applies machine learning predictive algorithms to compare bonds, selecting those with predicted best performance for inclusion in the customised portfolios.
In an investment world where positive risk-adjusted return and performance is paramount and where efficient, relatively low-cost solutions are in demand, such technology-focused solutions are not just a response to today’s challenges but also pre-empt the environment we face in the years to come. For bonds, the income may be predetermined, but the future isn’t – it makes sense to be prepared.
Written By
Adrian Gostick
Chief Revenue Officer of BondIT