Tag Archives: Investment Research

The world financial sector of 2025 is undergoing a swift transformation, driven by digital innovation, regulatory change, and changing customer demands. Surveys of leading consultants and regulatory bodies show that financial institutions are pouring capital into technology, cost discipline, and operational resilience to prosper in a complex, low-growth world. A key element of this shift is the growing dependence on operational outsourcing. It is delivering tangible benefits in cost savings, scalability, and access to specialized skills.

Various trends are observed of financial market surveys and the changes in 2025. Institutions are seeking to maintain their profitability and relevance by utilizing operational outsourcing. As it is an existing and effective key strategy for accessing specialized talents. They are actively contributing to the digital transformation journey for the sector. Financial institutions are leveraging technologies and partnerships to drive growth and manage risk. They also achieve an optimized operational excellence, catering to the complex and competitive market.

Macroeconomic Landscape and Sector Performance

As the banking sector comes into 2025 with guarded optimism. Top economies, spearheaded by the United States, remain to show resilient amid volatile interest rates and ongoing inflationary pressures. Central banks are walking a tightrope balancing the twin mandates of inflation control and job maintenance. Changes in rates are expected to spur lending and investment activity in the second half of the year. This macroeconomic climate is creating opportunities and challenges alike for financial services providers. It is to transform approaches to ride through volatility and exploit new growth streams.

The competitive landscape is transforming with unprecedented speed. Financial market surveys reveal that bigger incumbent players are using scale, technology, and diversified books to grab market share. Fintech challengers and non-bank newcomers are winning over niche segments through nimble, digital-led products. Strategic consolidation, acquisitions, and partnerships are redefining sector borders, inducing horizontal and vertical consolidation. The need for innovation and excellence in operations has never been more acute.

Global Economic Outlook

Central banks are managing ongoing inflation and disparate economic growth with prudent monetary policy tweaks. As per market surveys, the U.S. Federal Reserve has maintained interest rates at 4.25%–4.50%. It is hinting at cuts later in the year, while the European Central Bank has cut to 2.5% as eurozone inflation approaches the target. Divergence is global, with the U.S. economy set to expand by 1.7% and the eurozone by only 0.9%. Emerging markets such as India are seeing capital outflows and currency pressure. With foreign investors withdrawing more than $7.3 billion from equities in Q1, it is spurred by a firming dollar and rising U.S. yields. Inflationary pressures are still high due to supply shocks, geopolitical tensions, and energy price uncertainty.

Investor Confidence and Debt: Market Surveys

Investor Confidence and Debt: Market Surveys

Observing the market surveys, these patterns are redefining demand in financial services. More stringent rates have subdued mortgage and consumer lending. Although recent easing in some countries has spurred refinancing demand. Corporate lending is recovering tentatively as firms seek growth under stabilizing conditions. Market uncertainty is propelling investors into diversified, inflation-hedged products in wealth management. This helps in boosting advisory demand. Cross-border flows and dispersed regulatory systems are adding further complexity to world finance. Institutions must embed more nimble and region-specific compliance approaches.

Competitive Dynamics and Market Shifts 

Incumbent financial institutions are stepping up attempts at scale and efficiency. It is through investments in cutting-edge technologies, streamlining operations, and outsourcing non-core activities. Banks are speeding up, according to recent financial market surveys, digitalization through cloud shift, AI deployment, and automation. It is to drive customer experience and lower expenses. For instance, HSBC currently processes almost 1,000 payments every second and makes some 8,000 IT updates every week. Cyber defense is its biggest operational expense. Despite the move to digital, more than 13 million UK residents continue to rely on physical branches. Thus, it mirrors the imperative for hybrid service models.

Meanwhile, fintechs and non-bank institutions are upending conventional models by fast-funneling innovative products. It is through open banking APIs, exploiting niches such as digital payments, micro-lending, and embedded finance. Such high-growth companies as Airwallex have hit valuations of more than $6 billion, reflecting investor optimism. M&A is gaining pace, such as the $2.04 billion takeover of Pacific Premier Bancorp by Columbia Banking System. It is because institutions race to achieve horizontal and vertical integration to diversify and own the value chain. Increased regulatory attention to digital assets, systemic risk, and outsourcing is affecting strategic choices. Whereas government incentives are driving investment towards green finance and financial inclusion. At the same time, market surveys show the talent gap is increasing for the sector, particularly in tech, analytics, and cybersecurity. It is driving more use of outsourcing and global talent streams.

Regulatory Evolution and Compliance Pressures

The financial services regulatory environment is tightening, with international authorities imposing more stringent standards of transparency, risk management, and operational resilience. The EU’s Digital Operational Resilience Act (DORA), now in force since January, obliges financial institutions to introduce robust ICT risk frameworks, perform periodic resilience tests, and record meticulous control over third-party service providers. Backed by market surveys, failure to comply could attract fines up to 2% of turnover on a yearly global basis, which is driving high investment in compliance technology and internal process improvement.

Concurrently, anti-money laundering (AML) laws are tightening internationally. The EU has set up a central Anti-Money Laundering Authority (AMLA), while nations such as Australia are broadening AML requirements to newer professional groups to meet FATF standards. In the United States, enforcement continues to be robust despite more general deregulatory movements. To keep up with increasing compliance expenses and recurring regulatory changes, financial institutions are increasingly looking to outsourcing partners and enhancing internal risk management and reporting infrastructure so that market confidence does not erode, and enforcement action can be avoided.

Digital Transformation and Technology Disruption

In 2025, digital transformation is a core competitive strategy with financial institutions embracing cloud computing, AI, and automation quickly to automate operations, upgrade customer experiences, and create innovative products. According to market surveys, approximately 83% of institutions employ cloud solutions, and 80% intend to increase AI and machine learning usage.

Financial Market Surveys Insights on Digital Transformation

Financial Market Surveys Insights on Digital Transformation

AI helps in facilitating hyper-personalized services, enhancing fraud detection, and lowering operational expenses by as much as 22%. Legacy system integration with newer platforms is one of the biggest challenges, necessitating great investment and changing management. Market surveys reveal that those institutions that can achieve it are able to scale, embrace changing markets, and provide smooth omnichannel experiences. The world AI in the fintech market has increased immensely, identifying the strategic significance of AI in streamlining efficiency, security, and customer interaction in financial services.

Harnessing AI, Cloud, and Talent for Competitive Advantage

A survey of the financial market has shown that more than 70% of industry CEOs and top leaders view AI and digital integration as their highest strategic priority for the next three years. The market surveys also indicated that institutions that have invested heavily in these technologies have improved customer satisfaction and higher speed in adapting to market shifts. Yet, 65% of the participants mentioned legacy system integration as the main reason for not fully enjoying the benefits of digital transformation.

In order to remain competitive, financial institutions also invest heavily in reskilling their employees in line with digital transformation needs. Data analytics, cybersecurity, and AI implementation training programs are becoming increasingly common, and almost 60% of companies have reported budget growth for digital talent development in 2025. This movement not only improves internal capacities but also facilitates smoother technological adoption within units. Furthermore, the market surveys indicate increased application of generative AI in customer service and operations is facilitating institutions to provide faster, more precise answers, further advancing efficiency and client satisfaction. Technology and talent are increasingly seen as interdependent pillars of change.

Magistral Services for Financial Services Firms

Magistral serves financial services firms like investment banking, investment management firms, venture capital, and private equity firms. The core services that Magistral provides to these industries are:

Due Diligence & Deal Execution

Manager, fund, and company-level due diligence

Background checks of key people and stakeholders

Support throughout the deal life cycle, from consideration to closing

Financial Modeling & Valuation

Extensive financial models of M&A, investment analysis, and forecasting

Valuations of business, assets, and portfolios

Scenario planning and sensitivity analysis

Deal Origination and Pipeline Management 

Building and maintenance of deal pipelines 

Screening and sourcing of investment targets 

Investor and company profiling from proprietary databases

Fundraising and Investor Relations Management

Development of fundraising documents like pitch decks, IMs, and teasers 

Target investor profiling and outreach strategy 

GP/LP relationship management and reporting support

Portfolio & Fund Administration Support

Monitoring of portfolio performance and risk factors 

Fund-level reporting and analytics 

Support, including fund accounting and administration

Equity and Investment Research

Public and private equity research 

Thematic and sector-specific analysis 

ESG research and benchmarking

 

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to prabhash.choudhary@magistralconsulting.com

Magistral stands out through its deep domain expertise, customized AI-driven market surveys, and hands-on approach that integrates advanced analytics with strategic business insights, ensuring clients receive actionable recommendations tailored to their unique challenges.

Magistral uses robust methodologies and advanced analytics tools to validate data accuracy, complemented by our industry expertise to interpret market trends effectively and deliver relevant insights.

By engaging closely with clients to understand their unique goals and challenges, Magistral customizes research frameworks, data sources, and reporting formats to deliver relevant and actionable market intelligence.

Global investment research plays a critical role in shaping financial strategies and decisions across the world’s capital markets. As global markets continue to grow and the economies of the world become more interconnected it has come to be that quite advanced and sophisticated global investment research techniques are needed by institutional investors, asset managers and hedge funds especially. Such investors rely on using developing techniques that involve macroeconomic analysis, sector knowledge as well as security-specific analysis in making investment decisions in very uncertain and dynamic markets.

Macroeconomic Dynamics and Geopolitical Influences

External environment and the risk factors can chiefly influence investment decisions.

COVID-19 Influence on Inflationary Trends

The COVID–19 outbreak significantly contributed to rising inflation all over the world and by the year 2020 inflation stood at 8.8% the highest in a couple of years. As a result of the inflationary pressures, the central banks resorted to very forceful monetary policies, with that of the US entering as high as 5.25%-5.50% rate in the year 2023.

For Emerging Markets

Rising inflation and the changes in policies led to a great deal of capital flight from emerging markets. This situation has resulted in depreciating currencies, recession, and low growth rates in the respective areas.

Disruption in Trade Activities

Lockdowns imposed on the outbreak of the pandemic disrupted trade activities greatly, revealing the extent of global business operations. Close to these trade wars are causes like the one between America and China which also affect investment decisions among other issues in sectors like technology, energy, and agriculture that face tariffs that threaten business.

Rationale of Continuous Tracking

The members of the global investment research teams should also ensure that they monitor current economic developments, as well as changes in the relevant policy environment towards the future. It is necessary to know how geo-political factors impact in order to devise investment plans that would succeed.

Sector-Specific Research Identifying Trends and Opportunities

There are various trends in opportunities with regards to the different sectors. Some of them are:

Trends and Opportunities in Global Investment Research

Trends and Opportunities in Global Investment Research

Renewable Energy

In addition to the above, the renewable energy market is forecasted to grow in value to 2.15 trillion dollars by the year 2030 with the compound annual growth rate (CAGR) being 10.6%. This area has thus become a principal area of focus for a study on the trends of investments due to the changes towards the use of energy in a more sustainable manner.

Emerging Sectors AI & Biotech

Artificial Intelligence and Biotechnology are making their way towards convergence owing to the technology in these fields. The value of the AI industry can reach $407 billion by 2017, given the advances in machine learning and intelligence of various systems.

Investment In Clean Energy on The Rise

In reaction to these changes in perspectives, several nations have been providing crucial government returns on investment and the corresponding infrastructure costs for solar and wind, which has led to the clean energy drive seeing huge funding. In the year 2022 alone, the amount of money spent on clean energy projects out of all investments reached over 495 billion dollars, which indicates that investors have very positive expectations concerning this business.

Global Investment Growth

Increased investments in renewable energy, artificial intelligence, and biotechnology, among other levels, further affirm the global growth in investments. There has been a trend whereby technology and sustainability are driving most of the growth in such sectors.

Areas of Focus for Researchers

In the case of growing industries, global investment research teams are looking at the emerging industries, looking for the key players, their power and the barriers in the respective markets. This in turn puts most equities on an attractive investment climate for those who are concerned.

Quantitative Models and Advanced Data Analytics

Today quantitative analysis and applied big data science in global investment research are essential components of any investment research. In this respect, financial institutions have greatly utilized market models to assess future market performance. The global alternative data trends market in the financial services industry is expected to grow at a CAGR of 50.6% between 2024 and 2030. This is because of technological breakthroughs in machine learning and artificial intelligence.

Hedge funds have always been at the cutting edge as far as the development of sophisticated algorithms to engage in systematic trading optimally and more recently in high-frequency trading (HFT) which takes advantage of arbitrage opportunities. These funds apply sophisticated models to analyze huge amounts of data. This includes but not limited to historical prices of stocks, earnings data, and even social network sentiment. Studies on the subject have found that firms employing AI-based trading strategies outperform traditional strategies by about 25%.

The Role of Alternative Data in Decision-Making

Global investment research has experienced a shift with the incorporation of alternative data within its pyramid structure. Information obtained from various sources including satellite, web browsing, and geographical information gives current updates. This enables better decision-making for global investment research. The worldwide market for alternative data is predicted to expand at a CAGR of 52.1% between 2023 and 2030. This is because these insights assist investors in developing strategies.

For example, satellite images have enabled the modeling of dicot yield in regions. Thus, giving an alert when potential threats to food security arise. It can also extend to analyzing the social media sentiment towards the target brands or sectors to explain investor confidence.

The Future of Global Investment Research

The future of global investment research is undergoing a significant transformation. This is driven by technological advancements and evolving market dynamics in every sector.

The Future of Global Investment Research

The Future of Global Investment Research

Technological Advancements Shaping Research

AI will transform capabilities in research, especially in the speed of making resultant decisions. Advanced Data Analytics tools will go beyond and widen the research undertaken enhancing the precision and insight obtained.

Introduction of ESG and Other Data

Environmental, Social and Governance (ESG) factors will increasingly influence the investment decision-making process. The use of alternative data will be part of the analysis process to enhance the existing traditional methods.

Market Development and Projection

The Market is forecasted to Reach In the year 2024. The size of the global investment research market is estimated to be worth $19.4 billion. Estimation of Future Business Performance Forecasted to have a Compound Annual Growth Rate (CAGR) of 6.2% in the proceeding five years.

Factors for the Successful Future of Investment Management Companies

Agencies which successfully employ sophisticated technologies with updated tools and methods, will be in a position to tackle the challenges of the world. In an information industry where information is time it is hard to survive for firms that remain in stagnation.

Magistral’s Services for Global Investment Research

 

Magistral Consulting provides a complete range of global investment research services intended to facilitate value-added investment decision-making throughout the investment process. Our research capabilities are ranked by sectors, markets, and geography so that those investment firms that count on us will always have the right insights for their investment strategies. Below you can find some of our services for global investment research

Industry Research

Magistral’s thorough Industry Research supports global investment research. We enable firms to gain deep insights into industry movements, market features, and competitive environments. We evaluate the drivers of growth, regulatory changes, new technologies, and general economies to deliver market-ready solutions. Be it finding the right market or going into the depths of the sector. Our industry research surfacing threats and opportunities for investments allows providing all with statistics-centered choices in foresight of practice.

Company Profiling and Competitive Landscaping

Our Company Profiling and Competitive Landscaping services include an in-depth understanding of a company and its place in a given industry. Magistral, for instance, assesses the financial status of target companies, their operational effectiveness, market presence, and strategic movements in comparison with other participants.

Preparing Investment Memos

For global investment research, we also assist in preparing investment memos. More specifically in composing Memos where relevant information is compiled, analyzed, and presented clearly and concisely. Such documents include industry analysis, company business and financial plans, investment risk levels, and other more relevant information. This gives investors an awareness of the opportunities in the investment.

Research Incoming Pipeline

Magistral also assists investment firms in enhancing their deal flow through the Research Incoming Pipeline. We examine and screen potential investment opportunities according to a set of criteria such as business financial strength, market share, growth capacity, risks, and others, by our professional team.

 

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to prabhash.choudhary@magistralconsulting.com

Alternative data refers to non-traditional data sources like satellite imagery, social media sentiment, and web analytics. This data provides real-time insights that traditional data may not capture, allowing investors to better assess consumer behavior, supply chain risks, and environmental factors, leading to more informed investment decisions.

Regulatory frameworks, such as MiFID II in the EU, have changed how investment research is consumed and paid for. Additionally, regulations in emerging markets like China and India are continually evolving, affecting capital flows, taxation, and corporate governance. Research teams must stay updated on regulatory changes to ensure compliance and mitigate risks.

The future of investment research lies in the growing integration of artificial intelligence, big data analytics, ESG considerations, and alternative data sources. Investment firms that adopt these technologies and approaches will be better positioned to manage the increasing complexities of global markets and stay competitive.

Introduction

Corporate Finance is a subfield of finance concerned with how corporations handle funding sources, capital structuring, accounting, and investment decisions. Corporate finance is frequently charged with increasing shareholder value through long-term and short-term planning. Corporate finance activities range from capital investment to tax considerations.

In addition to capital investments, they are also given the task of monitoring cash flows, accounting, and preparing financial statements. Besides this, they carry out valuable activities like which investment activities need to be pursued. How do we pay for these investments via debt or equity etc? Also, decisions such as which shareholders should receive dividends and to what extent, fall into the purview of corporate finance.

How does Corporate Finance Work?

As it has been seen earlier corporate finance usually deals with maximizing returns to the shareholders of a company and its stockholders. Hence, it is but natural to observe that they are entrusted with organizational budgeting, investments, and capital allocation.

Functions of Corporate Finance

Functions of Corporate Finance

To illustrate this for example the corporate finance division may be given the task of computing capital requirements in order to acquire assets as well as find the most efficient sources of this capital acquisition. A key aspect of this decision-making is how do we finance this decision whether it be through debt or equity or both. At the same time, it requires one to make decisions that optimize working capital requirements.

It is necessary here to make a distinction between corporate finance and corporate accounting. The main difference here is that the corporate finance team is entrusted more with the strategic aspects of a decision such as a strategy formulation, planning, and directing while the corporate accounting team is entrusted with the day-to-day management of business and activities such as maintaining accounting records and preparing financial statements.

Principles of Corporate Finance

There are a few principles that guide the corporate finance function. They are as follows:

Principles of Corporate Finance

Principles of Corporate Finance

Investment principle –

This emphasizes the importance of weighing risk versus return. The evaluation of an investment proposal should be based on a hurdle rate that serves as a benchmark. It is important to ensure here that the risks do not overtake the returns.

This primarily requires thoughtful planning and deciding where to invest from a long-term perspective. This means deciding after a careful analysis as to whether or not to pursue an investment activity and whether to invest in a manner such that the highest risk minimized returns are got by the company. To accomplish this financial accounting tasks such as identifying capital expenditures, estimating cash flows, and comparing planned investments with projected income are used. Besides, financial modeling is also used with the help of techniques such as IRR and NPV to compare projects and choose the right ones

 Financing principle –

It emphasizes on maximizing returns from a given investment. Here the task is to assess which financing technique to use namely debt financing, equity financing, or a combination of both. Important considerations here are factors such as business structure and goals, cost of financing, interest rate calculation, and access to the equity market.

This activity is mainly associated with delving into which is the optimal way of financing a given project. The decisions include assessing factors whether to use debt, equity, or a mix of both. In the end, it is the job of corporate finance professionals to optimize the company’s capital structure by reducing its weighted average cost of capital (WACC). 

Dividend principle –

In this the key question is whether to streamline surplus towards business or distribute the dividends amongst the shareholders. Retained earnings that are not given back to the shareholders can be used to fund a business’s expansion and are one of the best sources of funds as it does not lead to accumulation of debts nor does it lead to a dilution of equity by the issuance of more shares. Similarly, another key decision could be to distribute dividends so as to create wealth for the shareholders thereby leading to better brand equity.

Types of Corporate Finance

There are a number of types of corporate finance for growing businesses. Some might prefer bank overdrafts, fixed term loans or others might prefer trade finance, leasing, venture capital, partners, etc. These are majorly defined in two types of corporate finance:

Short-term corporate finance:

These are the tools used when a business requires funds for a short period of time, say less than a year. These are commonly one-time loans and are beneficial when one is not able to get loans for a long tenure. Some of the examples of short-term corporate finance are:

-Bank Overdrafts

-Trade Credits

-Accrual Accounts

-Financial Lease

-Operating Lease

-Hire Purchase

Long-term corporate finance:

These are the loans that one repays over a period of one year or much longer than that, generally month-to-month installments. The benefit is that one gets the loan at minimum rates as well as minimum monthly payments as it spread out over the years. Some of the common long-term corporate finances are:

-Bank Loans

-Merchant Loans

-Debentures

-Equity Issuance

-Floatation

-Stock Dilution

Magistral’s services on Corporate Finance 

Some of the services that are associated with corporate finance that are offered by us are as follows:

-Fund Strategy: Finding growth potential, investment activity, investment sizes, and macro-economic factors for a specific industry, geography, or an investment philosophy

-Investor profiling: Finding out the set of right investors for your fund or other investing opportunity and profiling it for further actionable details

-Investor communication: Periodic update of MIS, reports, fund-performance, valuation metrics, fund-raising progress, and others for Boards and Investors (LPs and GPs).

-Content marketing: Creation of well-researched Thought Papers, PoVs, Case Studies, Market Reports, Industry Reports, Company, and News analyses.

-Modeling and valuations: LBO and DCF Modelling, Precedent Transaction Analysis, Merger modeling, Sum of Parts Analysis, Sensitivity Analysis, Equity Analysis, Comparable analysis

-Real estate financing models: Rent Vs. Sell Analysis, Rent Vs. Buy Analysis, Rent Roll Analysis, Property Price Trends, Sell Vs Construct and Sell Analysis

 Typical outcomes of our financial modeling services are –

– Independent and insight-based asset valuations

-Reduction in operations costs

-Leverage to negotiate a better valuation

-Exhaustive analysis to get other co-investors for an asset

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction to Equity and Country Themed Reports

Foreign securities account for a significant part of many investors’ portfolios. This selection requires a thorough examination of numerous mutual funds, exchange-traded funds (ETFs), and stock and bond offerings, yet investors sometimes overlook a critical first step in the foreign investing process. The first step in deciding to invest abroad is to assess the volatility of the investment environment in the country in question. Equity and country-themed reports for hedge funds are created to find any country risk associated with the economic, political, and business risks peculiar to a particular country and could result in unanticipated investment losses. In general, countries are divided into three categories based on their level of development: frontier, developing, and developed markets, with decreasing levels of national risk. Various criteria and studies can assess country risks, such as sovereign credit ratings and independent sovereign risk reports.

Factors in Equity & Country Themed Reports for Hedge Funds

Following are the factors in Equity & Country Themed Reports for hedge funds-

Factors in Equity & Country Themed Reports for Hedge Funds

Factors in Equity & Country Themed Reports for Hedge Funds

Economic Risk

Economic risk is the ability of a country to repay its obligations without any difficulties. A country with sound finances and a thriving economy should be able to give more trustworthy investments than one with shaky finances and a poor economy. Examining a country’s economic and financial foundations is crucial in deciding on an investment. Different analysts use different metrics when assessing an investment abroad, although most experts look at a country’s GDP, inflation, and consumer price index (CPI) readings. Investors should also consider the country’s financial market structure, the availability of appealing investment options, and the recent success of the local stock and bond markets.

Political Risk

This risk is linked to a country’s political policies that could result in an unexpected loss for investors. While economic risk is often defined as a country’s ability to pay its obligations, political risk is its willingness to repay loans or keep an investment-friendly environment. Even if a nation’s economy is good, the country would not be a worthwhile investment candidate if the political atmosphere is hostile to outside investors (or grows hostile).

Sovereign Risk

There is the danger that a foreign central bank would change its foreign exchange laws, lowering or cutting the value of one’s foreign exchange contracts significantly. Both equities and bond investors receive help from analyzing sovereign risk variables, while bond investors may benefit more directly.

A sovereign risk analysis can help create a macroeconomic portrait of the operating environment when investing in the shares of specific companies in a foreign country, but most research and analysis will need to be performed at the company level. If an investment is to be done directly in a country’s bonds, though, assessing the country’s economic state and strength can be an intelligent approach to assess a bond investment. The country’s potential to grow and create revenue is the underlying asset for a bond.

Social risks

The investment world in recent times has recognized that poor management of environmental and social issues and poor governance practices associated with business activities can create business risks and various difficulties for the financial institutions financing it. Environmental and social risk assessment and risk management have been needed. Production delays, accidents, threats to operating licenses, unplanned expenditures, and unwanted publicity can result from a business’s environmental and social risk impacts, whether real or perceived. Distinct investments have different environmental and social hazards based on the sector and country. The IFC Environmental and Social Performance Standards point out a minimal degree of environmental and social responsibility obligations in developing nations. The emphasis is on the methodical management of environmental and social challenges, which often needs the implementation of a customized environmental management system.

 Credit Ratings

Countries get credit ratings the same way firms do to figure out their ability to repay debt. Every investable country is given ratings by Moody’s, Standard & Poor’s (S&P), and other significant rating agencies. A country with a better credit rating is regarded as a more secure investment than one with a lower credit rating. Examining a country’s credit ratings is great when evaluating a potential investment.

Assessment in Industry Reports for Hedge Funds

Apart from the equity and country-themed reports for hedge funds, industry reports are also sort after as they give a better understanding of their working territories for hedge funds. They also get detailed information on all the concerned datasets essential for their operations to assess and manage them in a better way. The equity and country-themed reports for hedge funds, and an industry report will give much data for their consideration so that they do not make any errors in the early assessment period and conduct their operations smoothly. The industry report will have information on country-themed various aspects of their trade, while the critical points they cover are briefed below:

Assessment in Industry Reports for Hedge Funds

Assessment in Industry Reports for Hedge Funds

Assets under Management

The rise in hedge fund assets under management can be attributed to several variables. This exercise has included more jurisdictions, making the results more reflective of the global hedge fund sector. Furthermore, market forces are likely to have influenced this increase. Because most hedge funds focus their strategies on equity markets, the rise in valuations, particularly in equities markets, may have boosted the Assets under Management of some hedge funds. When considering the increase in the number of funds, a more significant increase in total Assets under Management might have been predicted.

Investment Strategy

Hedge funds are a broad umbrella term. Funds will seek specific investing strategies within that broad group—most of these fall into one of a dozen or more primary strategy types. Short positions are still under pressure as markets have continued to increase over the last few years. With rising losses, long/short strategies have shifted to align with long bias, yet they still are popular. Another factor contributing to the fall in long/short strategies is the internal “onboarding” of long/short strategic decision-making as large institutional investors look to bring such management in-house. As a result, many long-term hedge fund investors are no longer interested in such product offers.

Investment Exposures

The disparity between hedge funds’ short and long positions, said as a percentage is known as net exposure. A lower degree of net exposure reduces the risk of market changes affecting the fund’s portfolio. A fund’s net exposure should be examined alongside its gross exposure. Overall, sovereign bonds and cash equities have the highest long and short exposures in cash securities, excluding IR and FX derivatives, while equity derivatives have the most extensive derivatives exposures owned by funds. On a gross basis, interest rates and foreign exchange futures are the most significant exposures owned by qualifying hedge funds worldwide.

Leverage

Hedge funds use leverage to expand their investment exposure. Leverage allows a fund to raise its potential gains (and losses) by increasing the fund’s market exposure beyond its net asset value by employing financial instruments or borrowed money. Leverage can take many forms, including debt borrowing (also known as financial leverage) or certain types of derivatives (also known as synthetic leverage), and hedge funds are typically exempt from strict regulatory leverage limits and other soft “leverage requirements” such as asset concentration limits.

Services offered by Magistral Consulting on Equity and Country Themed Reports

The Equity and Country themed reports for Hedge Funds provided by Magistral Consulting offer a complete analysis of the above-said areas while also supplying a detailed and structured take on the entire target country that is to be sought after for the investment. This report will most importantly help reduce the operations costs for the hedge funds as the detailed report will help them make thoughtful decisions on their operations, moving away from those investments that are considered a liability for them. The equity and country-themed reports will also improve their alpha as the return of investments for the hedge funds will increase from the report’s input, positively changing them.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates and Portfolio companies. Its functional expertise is in Deal origination, Deal Execution, Due Diligence, Financial Modeling, Portfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

Investment banks utilize pitchbooks, which are sales books, to pitch potential clients as well as sell goods and services. It gives a general picture of the company, including historical information, financial strength, and services offered to potential customers. The sales crew of a company will utilize a pitchbook as a form of field guide to remember key benefits and to make clear crucial points. A pitch book should contain the crucial information required to persuade a potential investor, client, or business partner. Therefore, avoid using too many words and focus on the most critical things.

Key topics covered in a typical pitch book include details on the investment highlights, significant financial data, the company’s core clients and customer base diversity, obstacles to entry for competitors, ability, and plan to meet future projections, future growth opportunities, management team strength, scalability of functions, prospects in the external market place, and known risks. The information provided in the pitchbook is used by an investment bank’s sales team to market its services to potential customers. Pitchbooks can be very helpful for companies, investment bankers, investors, and other stakeholders.

Types of Pitchbook

There are four different types of pitchbooks, which are explained below:

General Pitchbook

A general pitchbook offers a wide picture of the organization and includes significant details such as past profitable investments, present transactions, trends in the market, and profit metrics. Additionally, it includes details on the company such as its history, size, key executives, and global outreach.

It includes a client list broken down by various sectors, along with the relevant services offered to each client. Finally, the pitchbook might also include information on the firm’s rivals. It gives a general overview of the company’s top rivals, their performance, and the firm’s market position in relation to them.

Deal Pitchbook

For specific deals, the team creates a pitchbook that highlights how the investment business can deliver services to meet the client’s financial needs. They use graphs to display market rates, trends, and explain the firm’s valuation. The pitchbook also includes a list of potential buyers, financial institutions, acquisitions, and a brief summary. Additionally, the team provides a summary of advice and suggestions to help the client achieve their objectives.

Management Presentation

After the business finalizes an agreement with a client, the team conducts management presentations to pitch to potential investors. These presentations detail the client’s business, outline investment needs, present financial metrics, and provide information about the project requiring funding.

Sell-Side M&A Pitchbook

A sell-side M&A pitchbook’s principal goal is to persuade the customer to choose the investment bank to conduct the transaction. It includes a list of prospective purchasers for the client’s business, an overview of the valuation, suggestions, information on the bank’s profitable transactions in the client’s sector, etc.

Challenges faced by companies in the creation of a Pitchbook

While creating the pitchbook, various challenges are faced by the companies as discussed below:

Streamlining, Structuring, and Customization

Often, companies face challenges in understanding their prospective clients/ customers, and hence collating, customizing, and structuring the Pitchbook is not efficient. Selecting the right data metrics and presenting them in a structured manner is quite an arduous task that is faced by the management throughout various stages.

Challenges faced by companies in the creation of a pitchbook

Challenges faced by companies in the creation of a Pitchbook

Time-consuming and Labour-intensive

For firms, it is a challenge, as it takes a lot of time to build and finalize the framework and create a pitchbook in tandem with all the requisite information. A business team working on a Pitchbook devotes its bandwidth to requirement gathering and other tasks related to Pitchbook, eventually losing focus on other priority tasks and core competencies, which can be detrimental to the organization’s growth.

Consistency and Upgradations

Continuously upgrading pitchbooks with respect to changing market scenarios/customer requirements is a must. The companies shall incorporate new ways and develop new methodologies to work and update pitchbooks regularly to better transpire and communicate the information to its stakeholders.

Managing various Stakeholders

Many people, including the managing director, vice president, associates, and analysts, are involved in the pitchbook preparation. To outperform the competition and persuade the client that they are the greatest in the market, the company must ensure that they are utilizing the most recent industry facts. The areas that require successful management include collaboration and coordination.

Understanding Client Requirements

An effective pitchbook must be able to focus on the important details while also meeting the client’s requirements. Understanding each aspect of a unique client and deciding what information to include and exclude presents a significant challenge for businesses.

Benefits of Pitchbook Support

Below are some of the major benefits of pitchbook support:

Focus on core competency 

Pitchbook assistance can allow businesses to focus on their core operations rather than devoting time to creating a Pitchbook in which they lack expertise. As a result, prioritizing the main job is critical.

Benefits of Pitchbook Support

Benefits of Pitchbook Support

Better Analysis and Structure

Pitchbook Support will better manage and coordinate various tasks while creating a Pitchbook. It will highlight the strengths, and showcase how the organization is different from its competitors in terms of experience, expertise, and modus operandi.

Cost and Expenditure control

You can convert fixed costs into variable prices with pitchbook support, meaning you only pay for the services you utilize. Consequently, adopting a support service can enable you to cut costs on a range of expenses, such as staffing, purchasing software, expertise, etc.

Better Branding and Messaging

Materials with inconsistent or poorly thought-out messaging could be detrimental to the brand’s reputation. Given the fierce competition in the market, having a brand and pitchbook approach that is compliance-focused is essential. Pitchbook support services help present your market position, strengths, and goodwill in a meaningful way.

Better Presentation 

Pitchbook support services can help to exercise brevity and incorporate various Charts, and graphs which makes the data metrics easy to understand. Moreover, it may also take up various cases to explain various elements to its prospective clients/customers.

Magistral’s Services on Pitchbook Support

By having a Pitchbook support service, an organization can save both time and costs. It can also focus on its core competencies. It can provide a platform where it can understand the needs and requirements. Following which it can offer tailor-made support services as you deem appropriate. At Magistral, in addition to providing an extension to your employees to assist with your particular needs, we give the strategic knowledge you want to assess change. To provide the most effective and cutting-edge financial solution for every client requirement, we draw upon the multi-function knowledge base and experience of professionals in many market segments. Magistral can help in Pitchbook support in various ways such as:

Enhancing Service Requirements:

Provide tailor-made services as per the needs and requirements of the customer. Taking into consideration of various stakeholders and employing various recommendations provided by them.

Data Management:

Cleaning and filtering out the data and ensuring that significant information is showcased in tandem with the graphical representations. Employing various data metrics and collating information as per the client’s requirement

Compliance and Research Management:

By merging information from internal, external, and third parties, we have a strong knowledge of the opportunities and challenges facing your firm. We have carefully chosen insights on markets, categories, competitors, and consumers. It will help your commercial and marketing teams make better strategic decisions with respect to compliance requirements.

Analysis and Execution:

We have a dedicated team of experts for handling respective operations for creating a Pitchbook. Having exposure to diverse fields and expertise in handling various functions handling in an efficient manner.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction          

An Investor Profiling summarizes an investor’s financial goals, situation, time horizon, and risk tolerance. It can assist individuals in making appropriate investment decisions. How much risk one should be willing to assume is determined by an investor profile. For example, a more conservative portfolio may be suitable if someone needs to preserve their money and have a short time horizon. If someone wants to expand their monetary liquid asset (cash) and has a longer time horizon, a more aggressive equity-based portfolio may be appropriate. The most essential quality of an investor is temperament, not intellect quoted to Warren Buffett.

The first step in creating a wealth plan is to analyze the ability to take financial risks. Risk tolerance is determined by duties, objectives, personality, and various other factors. A risk profile is created to accurately understand an individual’s ability to assume financial risk as part of their investment portfolio. There are two crucial components of an investor’s profile:  risk appetite and risk tolerance. Risk tolerance is the amount of risk that a person’s finances can endure, whereas risk appetite is the amount of risk that a person is willing to take.

Importance of Investor Profiling

Risk Profiling is vital for an investor. Before investing in the market, one thing which usually troubles every investor is risk. People are concerned about losing their investment capital or receiving less than expected returns; nevertheless, the risk is generally a mathematical figure, such as volatility, that can directly impact your investment capital.

Each investor’s tolerance for market volatility will be different. This disparity is caused by various variables such as income, obligations, age, etc. The quantification of investor profiling is risk-carrying capability and capacity.

Investment decisions are made on the risk-reward trade-off that an investor is prepared to make in the face of precarious financial markets. It is critical to assess your financial position before making an investment. Take into account your financial goals, risk tolerance, and time horizon to help you determine the investments that are best for you.

Risk factors involved in Investor Profiling

The three major risk factors involved in investor profiling consist of Risk need, Risk-taking ability, and Behavioral loss tolerance.

Risk factors involved in Investor Profiling

Risk factors involved in Investor Profiling

Risk need

The amount of financial risk that someone, as an investor, can safely accept depends on their circumstances. An investor who may be short on funds during retirement and wants to sustain their monthly cash flow may need to take certain risks to achieve their end goal. As a result, risk requirement is about how much risk you “need to take” as an investor. This capability varies depending on their age and other things. For obvious reasons, the risk-taking capacity decreases as age increases. If someone has a target goal and can save according to that, then he will need an annual return. The rate of return will define how much risk one can need to achieve their target. During investor profiling, financial advisers must calculate realistic potential returns and market risk environment for all assets based on historical growth rates and the current market situation. Failure to accomplish a goal should motivate you to save more money or work for extended periods.

Risk-Taking ability

Risk Capacity refers to an investor’s ability to take risks given his existing and ongoing financial status. That is; his or her net worth in relation to liabilities, financial ambitions, and time horizon for investing. It has the potential to reduce exposure to growth assets. One such sub-factor is the investment horizon. For instance, if someone has five years to reach their objectives, one must invest in safer assets because growth assets have high short-term volatility. Risk capacity, or dealing with financial loss, might also influence risk-taking. In terms of liquidity, if the need for liquidity is low in the stage of capital accumulation, then the risk-taking ability is high and vice versa.

For example, if someone is receiving a pension or has a future income or assets to sustain, and their objective is not fulfilled, they have a higher risk-taking capacity than otherwise.

Behavioral Loss Tolerance

Behavioral Loss Tolerance defines an investor’s psychological capacity to cope with market swings. This covers the reactions and responses to various market conditions, such as a correction phase. Behavioral loss tolerance is measured by exams, interviews, and questionnaires and specifies the utmost uncertainty one can accept. The amount of awareness regarding items and their experience over market cycles is determined by financial knowledge and investor experience.

Higher ratings on these criteria imply that investors can progress to growth assets. Risk composure shows the likelihood of acting irrationally in response to a perceived crisis, leading to losses. A trigger-happy investor sells stocks at the first hint of a market drop, whereas the patient investor holds on.

A better investor profiling strategy is feasible when all three components are reconciled and linked together. The investor’s risk appetite cannot exceed the risk tolerance of the aim. Higher risk-taking capacity may be ignored when both the need and the behavioral loss tolerance are low. When risk-taking capacity and behavioral loss tolerance are Higher, a lesser risk needs may be dismissed.

Combining all of these factors yields a genuine risk profile, which should be used to establish a suitable asset allocation mix or strategy, which may require the assistance of a professional financial adviser.

Types of Investor Risk Profile

Conservative

The protection of capital is the main priority of the investor, and they are ready to take minimal risks in exchange for limited or poor profits. The possible asset allocation is equity of 0-10%.

Types of Investor Risk Profile

Types of Investor Risk Profile

Moderately conservative

The moderately conservative investors are ready to take on a little amount of risk in exchange for the possibility of long-term gains. The possible asset allocation is equity of 10 – 30%.

Moderate

Investors are willing to accept a moderate amount of risk in exchange for potentially larger long-term rewards. This type of risk profile is most secure for the investor. The possible asset allocation is equity of 40 – 60%.

Moderately aggressive

To maximize prospective profits over the medium to long term, investors are willing to take on a high level of risk. The probable asset allocation is equity of 70 – 90%. 

Aggressive

The investor is willing to take significant risks to maximize long-term prospective returns and is aware that a major portion of their cash may be lost. The possible asset allocation is equity of 90 – 100%.

Magistral’s Process for Investor Profiling

A risk profile indicates the level of risk that an individual is capable and willing to tolerate and accept. The risk profiling process usually starts with analyzing and discussing the investor’s circumstances and the goals the investments or portfolio should achieve.

Standard Process for Risk Profiling

Standard Process for Risk Profiling

Investors may have various purposes, they may never have thought about or stated their aims in this way before, and they may not be able to capture encapsulate in terms of quantity or time.

Magistral makes sure to entail and enumerate each and every detail related to the client’s needs, and risk considerations during the investor profiling. The process for investor profiling is as follows:

Define Goals

Here we understand what the goals of clients are, in both the short term and long term. Moreover, we also focus on the goals aligned with the current financial status. By having a broad picture, we can then pave the correct way in order to maneuver in the right direction.

Risk Profile Questionnaire

In order to understand the risk-bearing capacity and the willingness of the client to take risks, it is imperative to know the levels of risk exposure of the client. This is done by sending a “Risk profile Questionnaire” to the client. After, filling it out, our team of experts analyzes the questionnaire in order to ascertain the optimum risk exposure of the client.

Scoring the Questionnaire

By having the requisite filter channels, within each category of questions and taking into consideration of various factors, we score each level of questions in tandem with the client’s requirements.

Analyzing and Examining

Careful Scrutiny and analysis of the answers with respective weightage to the client’s needs. We make sure to understand the various needs of the client needs in order to make an optimum risk profile.

Summary Close

Careful Scrutiny and analysis of the answers with respective weightage to the client’s needs. We make sure to understand. While onboarding the client we also deliver a summary of the procedure and the rules of engagement with clients.

Conclusion

Investor profiling is required for determining the optimal investment asset allocation for a portfolio. Because risk appetite is influenced by psychological characteristics, loss-bearing ability, investor age, income and costs, and other factors, each person has a unique risk profile.

Magistral consulting can help you complete a quick risk assessment to determine which risk group you belong to. We can perform the entire investor profiling process and then use this information to determine what percentage of your portfolio should be invested in which asset class.

Why Magistral consulting?

-We provide an exhaustive investor database which is helpful in finding the right kind of investor and beneficial in filtering out the information in concurrence with the existing market scenario and also providing tailor-made support in tandem with client requirements.

-Magistral consulting ensures analyst support at every step of Investor profiling. We have a dedicated team of experts for handling respective operations. In accordance to the client’s demands and specifications, we offer customized services. Considering various stakeholders’ concerns and implementing their diverse proposals.

-We provide a service of target company profiling. It is crucial for us to meet the specific  expectations of our customers by recognizing their requirements.

-It also provides Marketing and Communication support. We have a proficient team having experience in a variety of sectors and indeed the ability to handle different tasks effectively. We make sure to understand each and every client’s needs in a comprehensive manner and provide tailor-made services in an efficient manner.

About Magistral consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modeling, Portfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

Investment Banking is a special type of banking that helps organizations or individuals raise capital and provides consulting services to them. It helps in conducting large complicated transactions such as mergers or acquisitions or raising an initial public offering (IPO) using underwriting.

Investment Bankers are experts in the field of finance who have their fingers on the pulse of the market. As acknowledged worldwide this is one of the most complex financial mechanisms in the world.

As has been the case with different sectors, it has been for some time now that organizations have started investment banking outsourcing services to third-party vendors as well. Outsourcing one means giving the authority to outsource one of its services to these third-party vendors so that the company can save on operating costs and get specialized services from highly skilled staff- all this while ensuring adequate data security and adherence to regulatory compliances.

This helps organizations not only streamline their services but also provide value-added services to customers that they couldn’t have thought about earlier.

It is important to note that the nature of investment banking outsourcing and the services provided by vendors have evolved alongside technological advancements. The first and foremost is business digitization, which has resulted in increased transparency and visibility for clients, as well as a better end-user experience for customers. This has resulted in improved strategic partnerships and, as a result, higher quality work being outsourced by investment banking outsourcing clients, which can only be met with strategic partners.

Challenges Faced by Investment Banks

Modern investment banking faces various kinds of challenges that are listed below:

Challenges Faced By Investment Banks

Challenges Faced By Investment Banks

Scarce Capital Resources

Due to recession and depression all over the world, almost all markets, companies, and individuals are not comfortable investing their money in the capital markets. This has created a world where capital resources have become scarce. The job of an investment banker is to invest capital more efficiently, but due to the scarcity of resources, there is a reduced business for investment banks in general.

Need to Reduce Costs

Markets have become more competitive. As a result, the cost of goods and services is decreasing. This has an impact on the finance industry as well. Investment banks’ margins are shrinking, and thus their cost of capital is decreasing. As a result, they must reduce costs to encourage their investors to invest money.

Increased Regulations

The new structured products created and sold by investment banks go through strict regulations since the mortgage crisis in 2008. This creates a limit on the operations of investment banks. These increases cost for investment banks and they have to maintain a different department of qualified professionals so that they could create and bring in new investment opportunities after scrutinizing them.

Technology Disruptions

Rapid technological advancements have drastically altered every industry in the world, including investment banking. The fintech industry has emerged over the years as new technology. This industry revolves around providing the same financial services at a lower cost. They have access to cutting-edge technology and a modern network, allowing them to raise capital at a lower cost.

Cross Selling Complexities

A huge area of the investment banking services sector relies on cross-selling. For example, if someone is looking for mergers and acquisitions, the investment bankers provide them with the services such as issue management, capital structure advisory, and many more. This way they bring value to their clients. But due to limited budgets, they are limited to the services they offer. The declining budget causes decreased revenue for research and other departments.

Benefits of Investment Banking Outsourcing

There are several reasons why investment banking outsourcing is becoming increasingly popular. We have tried to highlight some of these reasons below. They are:

Benefits of Investment Banking

Benefits of Investment Banking

Focus on Core Business

Investment banking outsourcing can help companies in focusing on their core competencies rather than focusing on mundane tasks and being worried about their day-to-day operations.

Controlled Costs

Cutting operational costs is a challenge that exists with organizations throughout. Investment banking outsourcing provides an avenue where companies can take care of differences in the relative value of currencies to derive as much as 30-50% savings in costs.

Increased Efficiency

Investment banking outsourcing is a specialized operation and the workers who work for these banks need to be highly skilled for this. A similar talent of MBA’s exists in low-cost destinations like India where the operations can be outsourced to them. Highly skilled talent helps in improving the efficiency of investment banking services.

Changing Economic Factors

In today’s uncertain world, the political dynamics are changing daily. This has an impact on the economies of the world and since we are so intertwined today the ripple effects of adverse conditions in a globally connected country are bound to have effects on the whole world. Investment banking outsourcing ensures the risks are well hedged with specialized partners operating from different geographies across the world.

Technological Changes

Investment banking outsourcing has ensured that the companies are up to date with the latest technological advancements that are occurring worldwide at a fraction of the cost had they invested real-time into adopting them. The use of the latest technologies by third parties ensures that all the technological challenges are met.

Time Zone Advantage

The gap in time zones between your country and the area you are outsourcing to, in addition to the cost advantage, is another important benefit. By doing so, you can focus on your primary tasks all day long while also having finished your day-to-day operations by the time you get up the next day. It gives you the benefit of round-the-clock business operations.

Magistral’s Services on Investment Banking Outsourcing

The outsourcing of investment banking may be a way to cut operating expenses. In an era of growing complexity in both established and new industries, investment banks are extremely nuanced. Smaller investment banks have a difficult time juggling their project pipelines and manpower needs. Medium-sized banks are eager to develop their expertise in emerging industries, which are bustling with activity and volume. However, large banks are more concerned with cutting costs while maintaining the quality of the services they provide to their customers. Magistral provides a range of service options to support Investment Banks.

Some of the services that are associated with Investment Banking Outsourcing that is offered by Magistral consulting are:

-Deal Sourcing: Performing industry and market analysis, finding potential targets, and publishing newsletters are various kinds of services provided under deal sourcing.

-Data Cleansing: Data cleansing and mining are done to perform analysis on suitable data.

-Valuations: Valuations are done by creating financial models by various methods such as LBO/DCF Modelling, Comparable Analysis, Precedent Transaction Analysis, and Impact Analysis.

-Due Diligence:  Research-based due diligence both primary and secondary are performed to uncover the true potential of an asset while giving a completely independent opinion on investment quality.

-Deal Execution: Teasers and Investment Memorandums are made along with identifying the potential investors/buyers.

-Portfolio Management: Providing ESG compliance monitoring, preparing financial reports, business development support, and procurement support is provided.

-Equity Research and Analysis: The services provided under this head include fundamental analysis, quantitative analysis, credit analysis, and country analysis.

-Marketing: This includes creating white papers, case studies, thought papers, CRM management, etc.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to  prabhash.choudhary@magistralconsulting.com

Introduction

Around the globe, there is a trillion-dollar business of investing in all sorts of assets like equity, both public and private, real estate, and upcoming assets like cryptocurrencies. Once the investment is made, the task on the part of the investor shifts to investment management. There are many activities of investment management that could be outsourced and that is what leads us to analyze the stream of investment management outsourcing. Investment management and hence investment management outsourcing takes all forms depending on the asset being invested in, and the prime business of the asset or investment manager.

Here we take a look at major activities of each type of investment manager or asset manager which could be effectively outsourced to save on costs and improve quality.

Who Should Outsource Investment Management and How?

Outsourced Investment Management

Outsourced Investment Management for different types of Asset Managers

Private Equity and Venture Capital firms

The underlying asset that a Private Equity or a Venture Capital firm invests in is equity. Sometimes it’s for stocks listed on exchanges but most of the time these are private investments, the target of which are start-ups are unlisted companies.

In the PE/VC value chain of investing, there are activities like Fundraising, Deal origination, Deal execution, and Portfolio Management. Quite a few activities in these departments are outsourceable. For fundraising, the activities like investor reach-out, investor profiling, CRMs, newsletters, white papers, and data management jobs could be effectively outsourced. Regarding, Deal origination, the deal pipeline management has a great potential of outsourcing along with initial due diligence. Deal execution processes like valuation and financial modeling are templatized and could be considered. Portfolio management has varied activities and outsourcing potential vary as per the nature of the business of the portfolio companies. Most activities related to Strategy and Marketing have great potential for outsourcing when it comes to Portfolio Management.

Hedge Funds

For the most common type of hedge fund out there, that is a long-short equity hedge fund, multiple activities should be considered for outsourcing. Equity Research is the foremost one. The research that is done for the investors is almost always best to be outsourced. Apart from Equity Research, Fund Administration and Fund Accounting are better done when outsourced. It makes sense from the cost and expertise point of view. Marketing activities almost always have great potential for offshoring.

Real Estate

Managing a real estate asset after the investment comprises standardized work-streams. Most of it relates to collecting data, analyzing it, making reports, and raising red flags if any. Accounting and administration along with research has a great potential for outsourcing

Investment Banks

Investment Banks are into all sorts of assets directly or for their clients. For the varying types of their work pallet, there is varying potential for outsourcing.  For investment banks, activities that are commonly outsourced are Equity Research, Security-based Investment Research, development of excel or other automated models, investment research for private investments, marketing, deal origination, and deal execution. In fact, 30-50% of all activities performed by an investment bank has a solid potential for outsourcing that may be explored

Asset Management Firms

These are for specialized asset managers like managers managing a portfolio of crypto or commodities. There is no one size fits all approach to outsourcing for these asset managers. As a thumb rule, everything related to technology like platform development, automation, website development, or software development can be outsourced. Also, anything that is of support function’s nature like Strategy or Marketing could be looked at.

Models of engagement with the outsourcing vendor

Once you have made your mind to explore outsourcing, the biggest concern is around the way an outsourced vendor or the service provider would work with you and your team. There are three established models of working while outsourcing. These are FTEs, Retainer, and Ad-hoc. Some progressive vendors like Magistral are signing up success-based contracts too.

Outsourcing Engagement Model

Investment Management Outsourcing Engagement Model

FTEs

FTE the most common engagement model for investment management outsourcing.

FTE stands for Full-Time Employee equivalent. It’s like a virtual employee who is operating from a different country. This virtual employee could be coordinated with, on email, video calls, WhatsApp, chats, or any other mode that is suitable to the client and is convenient as per time zone differences. It looks like a person is aligned with the client full time and he works seamlessly with the client. That is always the case, but the vendor, his processes, training, supervision, and culture play a big role in ensuring the continuity of services. A vendor enables the FTE to perform optimally by providing training and desired supervision. The vendor’s processes ensure that the client is insulated from the bad performance of FTE as the work is supervised by more senior resources. In case the individual decides to leave the organization, similarly, qualified and trained professionals are available on the bench for the replacement. That is the reason it makes sense to work with individuals through the service providers who may be an established name in their industry. Working directly through freelancing websites or hiring directly exposes clients to manage costs and risks, which is not the case while dealing with an established service provider.

This also is the cheapest model on per hour basis. But it is inflexible as there may be contractual obligations for a minimum period of support. This case is more prominent when resources are specialized in niche skills

Typical jobs that require FTE engagements are operational, where the offshored team works with the onsite team seamlessly. So, if a task is part of your ongoing investment management operations, mostly it will be outsourced on FTE-based engagement.

Retainer

You know there is a need for outsourcing tasks. At the same time, you think a full-time individual working on these jobs may be overkill. In these situations, where tasks just require some hours every month, the retainer model of engagement comes in handy. Say rather than hiring an FTE or a full-time virtual employee, you would only want 100 hours’ worth of tasks outsourced every month. A retainer is far more flexible than FTEs but costs higher on per hour cost basis. Typical jobs that are suitable for retainer-type outsourcing are newsletters, MIS, reports preparation, and other marketing-related tasks.

Ad-hoc Projects

As the name suggests the engagement is for one-time projects only. A client gives out the scope of the project. The service provider or the vendor provides a proposal that carries, scope of work, timelines, and commercials. The project kicks off after the client signs off the proposal and is paid after the delivery of the project. Almost any project that is strategic and is not expected to be repeated on an ongoing basis is an ideal candidate for ad-hoc based outsourcing. Also, it’s an ideal mode, if you would want to test the services of a vendor before signing a longer-term contract. It is the most flexible outsourcing arrangement as projects may start or end at your convenience, but at the same time, it is costliest in terms of cost per hour basis.

Success Based

Most traditional service providers shy from signing a success-based engagement. The fear stems from the trust deficit, performance fears, and the complications of defining a success scenario. Magistral signs success-based engagements with clients, with whom it has existing relationships. Existing relationships take the risks related to trust deficit and performance. A mutually agreed “success” scenario could also be defined in those situations. The tasks that are outsourced under these arrangements usually relate to fundraising, deal sourcing, and meetings’ set up

Magistral has helped more than 100 clients in outsourcing and offshoring multiple activities related to the Investment Management process. To start a conversation drop a line here.

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modeling, Portfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

 

 

 

What are Outsourced Investment Officer (OCIO) Services?

An Outsourced Investment Officer services or OCIO provide support in terms of research and analytics for investment decisions by a company, Private Equity or Venture Capital Fund, Hedge Fund, Family Office, or an Investment Bank. Simply put, An Outsourced Chief Investment Officer fills in for a regular Chief Investment Officer as and when required. Mostly it comprises activities that support a CIO in performing his services effectively.

When is OCIO needed?

Outsourced Chief Investment Officer services are designed for funds like Private Equity, Venture Capital, and Hedge Funds, and for Family Offices, Investment Banks, and M&A functions of Corporates

Need of OCIO Services

When it makes sense to outsource Chief Investment Officer?

 

It’s not possible to hire a full-time CIO in all situations. In many business scenarios, there is a requirement of a team that supports the CIO. This size of the team changes as per the deal flow. Some of these situations are:

-The fund is small and cannot afford a full-time CIO

-The fund is still raising and cannot onboard a full-time CIO unless the fund reaches its target close

-A full-time CIO is there but there are way too many investment decisions that need analysis and hence the requirement of a trained investing team

-A Corporate house is looking for a specific opportunity of M&A and does not want to hire a full-time CIO for a few deals here and there

 

What are the advantages of an Outsourced Chief Investment Officer?

Outsourced Chief Investment Officer makes an absolute sense when looked at from the cost perspective.  When outsourced to a low-cost country, OCIO could produce a benefit of a 30-70% reduction in cost by either outsourcing the CIO or the team or some of the functions and projects. A specific function where the in-house team lacks the expertise could be outsourced as well. Here are the typical advantages of outsourced CIO:

–30-70% reduction in the costs depending on the location from where the outsourcing takes place

–A plug and play outsourced Chief Investment Officer model where a CIO comes into play when required. If there is only one deal that has to take place in a year, it makes sense to hire a CIO for only as many days as required. Outsourced CIO fits in perfectly for this requirement

–A specific Skillset requirement: With complex investing scenarios and multiple complex options in investing, there are many niche skills that are required to make an investment decision. Outsourcing could be done for these niche skills whenever required

–Team Augmentation: This is the most important advantage of outsourcing the CIO. It’s not about replacing or hiring an outside CIO, it’s about augmenting the team under the current CIO. It may so happen that business requires enhanced analyst capacity due to increased deal flow or a few special one-time projects. Outsourced Chief Investment Officer Services fill in perfectly here and augment the team as required

Activities under Outsourced CIO

The activities that come under OCIO are either the overall decision analytics or a particular subset of activities that lump under the investment decision making process. Here are the activities that form the major part of Outsourced CIO services:

Outsourced Chief Investment Officer Services

Activities provided under OCIO services

Investments

Research and Analytics services for investments are performed under this service. The investment could be done in companies, stocks, funds, or real estate. Almost all the subset of activities could be outsourced. Here are the typical examples of the projects

-Finding out the right price for a company stock

-Finding out the valuation of a private or a public company

-Doing due diligence of a fund or a company before investment

-Originating deals as per the investment objectives of the fund

-Maintaining and populating the deal pipeline for future deals

-Profiling potential companies or investing

-Profiling various Hedge funds for investing in case of Fund of Funds

-Other Strategy, Research, or Marketing tasks

Portfolio Management

Research and Analytics services that are required for the smooth functioning of portfolio companies come under this. For Hedge funds, it will be continuously evaluating long-short positions. Here are the typical projects that could be outsourced:

-Valuation of portfolio companies

-Research support for portfolio companies

-Marketing and Business development support for portfolio companies

-Evaluating long term long and short positions of a long-short equity hedge fund

-List generation for a portfolio company to sell its products

-Lead generation for further acquisition or finding a buyer of the company

-Market entry strategy for a new market or a new product

-Annual business plans

-Key accounts management for major clients of the portfolio companies

-New product development and related market research for portfolio companies

Operations

Under these services are the activities that enable the smooth functioning of a fund. This comprises Middle and Back office operations outsourcing. Some of the examples of the projects undertaken are:

-Fund administration services

-Annual and quarterly audits

-Tax preparations

-Investor portfolio accounting, subscriptions, and redemptions

-Fee waterfalls

-Middle office outsourcing

-Back office outsourcing

-Trade accounting

-Exception handling

-Cash and Trade reconciliation

Under this multiple software also could be used to make sure many of these activities are automated and processes efficiently

Outsourced Chief Investment Officer Model

The way an outsourced CIO model works is by hiring FTEs offshore. FTE stands for Full-Time Employees/Equivalents. These are the offshore-based analysts who support multiple tasks related to investment research and decision making. Apart from hiring full-time resources, there are options for buying analyst hours or outsourcing a specific project.

Magistral Consulting has helped multiple funds and companies in outsourcing CIO related activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modeling, Portfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About Magistral

Magistral is a leading research, analytics, and consulting services provider for Investment Banks, Private Equity, Venture Capital, Family Offices, and Hedge Funds. It has more than 100 clients across the globe. If you need any of Magistral’s work samples or need to talk to any of its existing clients and referenced drop a line at www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.

Investment Research Outsourcing

Multiple Investment Services firms like Investment Banks, Private Equity, Venture Capital, Hedge Funds, Family Offices, and Asset Management firms are looking to outsource investment research in the post-Covid 19 pandemic era. The article describes the concept of Investment Research and the ways to go about outsourcing the process.

What is Investment Research? Investment Research Definition

Investment Research and Analysis or Investment Analytics combines multiple activities related to investments in Equity of companies (both public and private) and other financial instruments.

The major activities related to securities research are equity research, Fixed Income and Credit Research, Index and Quantitative Research, and Macroeconomic Research.

Another important aspect of Investment research is the support services towards Corporate Finance and Valuations. It includes activities like Investment banking support, Valuation support, business information services, and Private Equity and Venture Capital support.

Investment research also comprise of data governance-related activities like outsourced CFO.

Is Outsourcing a Good Idea?

Investment Research Outsourcing is fast catching up. Here are the trends that are leading to expending the concept of Investment Research Outsourcing

The pressure to lower costs: Investment Banking is not what it used to be. The digital world has shrunk the opportunities to make big dollars brokering big deals or IPOs. This has also led to pressure on costs. This leads to outsourcing non-critical jobs to low-cost countries like India.

Diversification on investment types: An Investment manager has way too many asset classes to handle today. It’s not only limited to public equity but now has diversified into private equity, real estate, cryptocurrencies, commodities, REITs, Index-linked instruments, and many other asset classes. If the investment team is small, it’s difficult to have a combination of skillsets to provide a holistic solution to their clients. As outsourcing vendors understand Investment Research dynamics well, Outsourcing helps in bridging the skill gap. Outsourcing vendors also have access to multiple investment research tools.

Information Sources and Databases: With the proliferation in investment type, also gone up is the requirement of multiple databases for varied data points. It’s a costly affair to maintain access to multiple databases in-house. Investment research tools are also used to fine-tune the data and information.

Confidentiality: There is pressure to keep all information confidential. An outsourced team doing due diligence is perfect, as it leaves no trace of who the client maybe, that is doing the due diligence. An analyst can talk to potential target with or without introducing the client.

Quality: Outsourced players have better quality than the in-house team. The outsourced team typically is bigger and has done similar tasks multiple times before. In the process, they usually create an information bank or templates that are ready to use. They also sit on the hoard of best practices for multiple situations. If the outsourced player has its knowledge process well documented, they are in a better position to offer work quality.

Effective Supervision: When internal teams are working on an analytical project, it’s difficult for a partner to take time out to get into the details of data, information, and analytics therein. But with an experienced outsourcing player, there are multiple levels of supervision, governance structures, and quality control processes to establish an error-free work every time.

Variable Costs: Firms can modify the outsourcing agreement to pay based on hours consumed or per assignment outsourced, rather than hiring a full-time virtual investment analysis. This brings immense flexibility in terms of costs. An investment firm can hire only for the assignment and then go back to the original structure, once the job is done. This is very useful for smaller investment teams and firms with partners only, who need an on-demand investment research analyst. An investment research team can come together ad-hoc and then could be dismantled when the job is done.

What jobs can be performed with Outsourced Investment Research?
Outsourced Investment Research Activities

There are multiple elements of the Investment Research Process, that could be potentially outsourced:

Equity Research: Equity Research is the most voluminous work as Investment Banks usually outsource quantitative investment research. Equity research teams typically conduct fundamental analysis on a set of regularly tracked stocks. They publish a report each quarter for every stock covered, detailing developments and valuation-related metrics. These Investment Research Reports are updated periodically, and their format is customized based on client preferences. Outsourcing this activity allows the in-house team to cover more stocks than it would have covered otherwise. Teams can also break this task into multiple streams before outsourcing—for example, preparing the DCF model, updating it periodically, or analyzing investor calls from the company’s management. Investment Research Analysts work as an extended offshore team to the in-house team. Investment research software aids the in-house tech capability.

Due Diligence of Private and Public Companies: Due diligence is time-consuming and requires huge efforts. Sometimes the due diligence can last even for a year analyzing tons of data and information. A dedicated support team that handles requests and delivers as promised enhances efficiency and ensures due diligence is completed within prescribed timelines and at appropriate valuations. It also ensures that the asset delivers the intended value for investors post-investment.

Fund Administration and Investor Relations: There are multiple activities of fund administration and investor relations that could be outsourced like Newsletters, MISs, Expense Tracking, Accounting, Company Registration, and multiple other similar activities. Firms use Investment Research Management Software or Investment Research Platforms to coordinate and streamline multiple related activities.

Outsourced CFO/ Outsourced CMO/ Outsourced CPO for portfolio companies: This is very relevant for Venture Capital and Private Equity firms that go into the nitty-gritty of operations for portfolio companies. Rather than hiring a full-time Chief Financial Officer, Chief Marketing Officer, or Chief Procurement Officer, one can just outsource these activities and pay for the services when needed. Some activities related to lead generation in sales and business development could be outsourced as well. Outsourced CFO is the most popular option.

Research and Strategy: Organizations generally run Research and Strategy projects parallel to core operations. These projects often experience phases of hyperactivity followed by periods of lull in the number of initiatives undertaken. Outsourcing these keep the focus of operations’ team on the day to day operations and an unbiased view of the strategic potential from someone who has a fresh eyes perspective on things.

Financial Modeling: Financial modeling is more of an art than science. Asking the right questions and capturing detailed insights is a skill developed over time. Most internal teams lack expertise in these tasks, as they typically handle them only occasionally. An outsourcing entity has ready templates and has done these over time to know the exact pain points and the right questions for the perfect financial model. Investment Banking Research Analysts are well versed with multiple aspects of financial modeling.

Deal Origination: Private Equity and Venture Capital firms must continually populate their deal pipeline to operate like well-oiled machines. They can effectively outsource most deal origination activities by breaking them into sub-activities and delegating non-critical tasks. While the firm retains investment decision-making in-house, it can outsource company profiling, list generation, and initial due diligence. After making an investment decision, the firm can also outsource parts of the detailed due diligence process.

How to Go About Outsourcing Investment Research?

There are multiple investment research companies and investment research firms which assist in outsourcing investment research services by offering virtual investment research analyst. They are varied in size and geographical presence. There are multiple investment research firms in India, that offer low-cost advantages.  You can make a list of suitable vendors either from Google search, references or when a sales leader reaches out to you. The very first step towards establishing suitability is to ask for past work samples. Once you have had a look at the work samples and they appear good quality, ask for a proposal for a pilot project. Teams undertake a pilot as a smaller project before outsourcing a larger portion of the operations, allowing them to assess capabilities and ensure alignment.

A pilot project should ideally last from a week to a quarter. This should give you ample time to experience the vendor’s capability and skills. Once the pilot succeeds, you should negotiate a larger engagement. Also, ensure the vendor offers competitive pricing for the quality of services delivered.

Magistral Consulting has helped dozens of buy-sides and sell-side firms in outsourcing their investment research operations. It is one of the leading Investment Research companies in India with the capability of performing global investment research. A one-stop-shop for all requirements of investment research and analysis. It has delivery centers in India that give it a cost advantage with sales offices in all the major cities across the world. To drop a business inquiry with Magistral, click, https://magistralconsulting.com/contact/

The author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsulting.com for any queries. For further details on Magistral and its services, visit www.magistralconsulting.com