Joel Burnette
Executive Director, EMEA Sales
Enfusion
As global investment opportunities continue to expand, investment managers across the Middle East and Africa (MEA) are seeking growth. Common strategies include a mix of traditional developed global markets and developing economies that lie within reach of these markets.
For these MEA investment managers, capitalizing on emerging and frontier markets presents opportunities but also comes with distinct challenges that require robust investment management capabilities and platforms to support them. For managing diverse portfolios, the right tools and support are essential for remaining flexible, navigating the complexities, and maximizing returns.
The Growing Importance of Emerging and Frontier Markets
Emerging markets have long been recognized for their potential to deliver high returns, driven by rapid economic growth, expanding middle classes, and increasing industrialization. Sub-Saharan Africa is a case in point. However, the opportunities in frontier markets such as Africa are equally compelling, offering access to early-stage growth in regions that are rapidly developing.
The challenge lies in effectively managing the risks and operational nuances associated with these markets, where a sophisticated investment management platform—able to support workflows from front to back office—becomes indispensable.
Key Considerations for Investment Management Platforms
When operating in emerging and frontier markets, investment managers must prioritize several platform characteristics: robust multi-currency support, seamless data integration, and real-time portfolio visibility.
In addition, these markets often involve complex regulatory landscapes and unique liquidity challenges, making it crucial to have a platform that can handle diverse asset classes and provide comprehensive compliance and reporting tools.
Finally, the ability to scale as markets evolve is essential. We believe that a platform that integrates front, middle, and back-office operations, with strong customer support, is the ideal fit for the complexities of emerging markets. Flexibility and modularity ensure that managers can adapt quickly and maintain operational efficiency across regions.
Front Office Capabilities
Portfolio managers with emerging and frontier strategies need tools that provide real-time data and insights to make informed decisions quickly. They must also respond to many of the currency and risk factors common in this wide range of markets.
Key front-office capabilities include:
| Requirement | Emerging/Frontier Market Needs | Enfusion Capabilities |
| Multi-Currency Trading | Managing portfolios in multiple currencies is a necessity. Managers must be able to execute trades efficiently without worrying about currency mismatches. | Enfusion enables seamless trading across different currencies and jurisdictions. |
| Real-Time Portfolio Visibility | Market volatility makes having up-to-date information on positions, risk profiles, and market exposures crucial. | Enfusion provides a unified real-time dataset (as an add-on), enabling PMs to react swiftly to market changes. |
| Liquidity | Investments in emerging and frontier markets often involve thinly traded and less liquid assets. | Enfusion offers real-time visibility into liquidity risks so PMs can make informed decisions and adjust swiftly. |
| Enhanced Risk Management | Inherent risks in emerging and frontier markets, such as political instability and liquidity concerns, elevate the value of advanced risk management tools. | Enfusion includes robust risk metrics, calculations, and data feeds that help PMs identify and manage risks proactively. |
Middle Office Capabilities
The operational complexities of emerging and frontier markets come to the forefront in the middle office. Managing these complexities efficiently ensures smooth investment operations and maintains the agility needed to navigate unpredictable markets.
Key middle office capabilities include:
| Requirement | Emerging/Frontier Market Needs | Enfusion Capabilities |
| Operational Efficiency | In markets with cost considerations, operational efficiency, and cost reduction can make or break an investment strategy. Efficiency allows investment managers to focus on their core activities rather than dealing with technical hurdles. | Because Enfusion is cloud-native, investment managers can eliminate so-called “legacy systems” (older, on-premises technology). This advantage makes it easier to maintain systems and integrate with many providers, including prime and executing brokers who operate in emerging and frontier markets. |
| Compliance and Reporting | Regulatory environments and investor requirements in emerging and frontier markets can be unpredictable and vary significantly from one region to another. | Enfusion provides integrated compliance tools, strategy tagging, and customizable reporting features to make moving across markets and asset classes more nimble. |
| Workflow Automation | Automating routine tasks such as trade confirmations, reconciliations, and corporate actions allows middle office teams to run lean. | Enfusion streamlines processes with modularity that makes it easier to integrate with a wide range of service providers. |
Back Office Capabilities
The back office in emerging and frontier markets must be particularly robust, given the challenges of managing diverse asset classes and currencies in regions with varying levels of financial infrastructure. Accurate and scalable back-office operations support long-term growth and ensure operational integrity.
Key back office capabilities include:
| Requirement | Emerging/Frontier Market Needs | Enfusion Capabilities |
| Accurate Reconciliation and Accounting | In environments with multiple asset classes and currencies, accurate and timely reconciliation is critical. | Enfusion supports multi-currency accounting and provides automated reconciliation tools, ensuring that books are always up-to-date and accurate. These features maintain accurate books of record and support shadow accounting. |
| Corporate Actions and Cash Flow Management | Managing corporate actions, such as dividends, splits, and mergers, is complex in any market, particularly frontier markets. | Enfusion automates corporate actions and cash management across different currencies, reducing the risk of errors and ensuring smooth operations. |
| Scalable Infrastructure | As investment managers expand into new markets, their back office systems must be able to scale accordingly. | Enfusion’s cloud-based platform is designed to grow with the business, allowing firms to enter new regions without additional infrastructure. |
Conclusion
Operating in emerging and frontier markets offers significant growth opportunities. It also requires a robust investment management platform capable of handling the complexities and risks unique to these regions.
By choosing a platform like Enfusion, investment managers can ensure they have the tools to manage multi-currency trading, real-time data visibility, regulatory compliance, and scalable operations. Investing in the right platform enhances operational efficiency and positions managers to capitalize on dynamic new market opportunities.
To explore how Enfusion can empower your investment strategies in emerging and frontier markets, contact us today for a personalized demo.
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