BOSTON–(BUSINESS WIRE)–Alternative investment fintech Dynamo Software, in partnership with Northfield Information Services, today released the results of a new survey, Trends, challenges and insights from leading LPs and resource allocators. During the month of September 2022, Dynamo and Northfield surveyed decision makers within the Limited Partner (LP) and asset allocator marketplace. The research revealed several notable attitudes, predictions and strategic plans for the next 12 months.
The survey’s findings are contextualized in the Dynamo Frontline Insight report. Among the findings:
Portfolio strategy
Alternative investments are expected to remain a key strategy for LPs and asset allocators going into next year. 96 percent of decision makers who participated in the survey said they would either increase (55%) or maintain (41%) their allocation to alternatives.
When asked how they plan to invest in alternatives, respondents overwhelmingly chose fund managers, with 77% choosing this allocation. Co-investments and direct investments followed with 55% and 42% respectively. Secondaries (28%), derivatives (19%) and cryptocurrencies (13%) also appeared on the list of top options for 2023.
In light of the many priorities spurred by a bear market, 37% of respondents did not find ESG to be a current priority for their business. Dynamo’s research insights team anticipates that this may be due to a lack of consensus around ESG definitions, as well as standards for measurement.
Technology
When asked to rank the challenges they face in their investment processes, participants ranked “document collection and/or data mining” as No. 1, followed by “comprehensive view of portfolio exposures” (No. 2) and “management of risk” (No. 3 ). It is therefore no surprise that 94% intend to spend the same (43%) or more (51%) on technology to solve these challenges.
Almost 8 in 10 (77%) respondents did not feel that all of their current investment processes could be considered “excellent”. In fact, 11% characterized their processes as “poor”. This may explain why the largest percentage of respondents chose “Remove manual data tasks and introduce automated workflows” as the No. 1 priority for their firms in the next 12 months.
Similarly, participants named “portfolio management systems” and “data automation” as the No. 1 and No. 2 technology areas to focus on in the next 12 months. “Exposure Analysis” came in at No. 3.
Talent
Although “recruiting and retaining talented employees” ranked No. 2 among the top areas of focus for LPs and asset allocators, respondents also acknowledged the need to strengthen existing employees. “the ability to better enable [our] team to manage new investment structures’ was among the top three priorities for 2023, along with ‘managing key relationships’.
Technology and talent go hand in hand, a reality observed in the Dynamo 2023 Frontline Insight report: “Implementation of systems that can keep critical investment data in one centralized place, so that business knowledge does not disappear when departure happens the door with its former employees, will be a valuable focus.”
In addition to linking technology and talent, survey participants cited technology as one of the most important initiatives brought about by the pandemic. When asked about the biggest impact of the transition to remote working, 35% chose “adoption of new technology to improve workflow and communication”.
Increased focus on understanding LP and Asset Allocator strategy
The Frontline Insight report is the first in a new series of Alternative Investment Research reports led by Dynamo. According to CEO Hank Boughner, the research series is a critical initiative to keep the Dynamo team in lockstep with the power users of its end-to-end software.
“Chasing alpha investments in a bear market can take many different paths,” Boughner said. “Research like this gives our alternative marketing strategists and product innovation teams a better understanding of which avenues will get the most foot traffic in 2023. They will use this intelligence to ensure our platform is configured to smooth the way to big returns.”
The complete “Dynamo Frontline Insight Report: Trends, Challenges, & Insights from Leading LPs & Asset Allocators” can be accessed at
About Dynamo Software, Inc.
Dynamo Software’s mission is to be the leading global, end-to-end cloud software platform for the alternative ecosystem, serving the information sharing and analytical data needs of our constituents. Since 1998, the company has provided industry-specific, highly configurable cloud investment management, reporting and data management software solutions to the global alternative investment industry. Dynamo’s cloud-based solutions serve the private investment landscape, including: private equity and venture capital funds, real estate investment companies, infrastructure, hedge funds, endowments, pensions, foundations, prime brokers, fund of funds, family offices and fund administrators. The Dynamo™ platform has improved productivity across the options ecosystem, including CRM, fundraising, deal management, research management, investor services, portfolio management and compliance teams worldwide. Dynamo has a global footprint with operations across North America, EMEA, APAC and the UAE. For more information, please visit www.DynamoSoftware.com.
About Northfield Information Services, Inc.
Northfield is a leading provider of risk management analytics known for its research-based applications and industry-wide thought leadership. Founded in 1985, we provide our risk forecasting services to over 200 asset managers and asset owner clients worldwide. We are headquartered in Boston, with offices in London and Sydney. For more information, please visit:
