Merganser Capital Management is a fixed income investment manager in Boston that serves a diverse group of clientsin a variety of industries nationwide including Pension, Public, Operating, Taft-Hartley and Endowment Funds, Defined Contribution Plans, as well as highly-regarded investment groups in a sub-advisory capacity. Charles River IMS creates efficiencies that allow Merganser Capital Management to focus on core competencies.
Jeff, could you please tell me a little bit about your firm?
Merganser’s been in business since 1986. We serve a broad range of institutional clients including endowments, foundations, and pension plans. We are strictly a fixed income shop, primarily with US dollar type investments. We pride ourselves on providing customized service to each of these clients. Charles River really allows us to customize our investment guidelines to meet their needs. It’s not a one size fits all; it’s very much a customized solution for us.
What are some of the key trends in the fixed income market, and what challenges are you facing as a result of these?
It’s been a pretty wild ride the last few years. Just when you thought it was safe to go back in the water from the credit crisis, here we are again two years later with the US downgrade, a lot going on over in Europe. The challenge for me, as someone who serves our investment team, is to be able to provide them with the tools to look through an investment and see our exposures. From a fixed income perspective, we’re always concerned about issuers and parent companies and who actually is the one responsible for paying off credits. We find that getting data information into the system and being able to dice and slice it really does provide us with an advantage in terms of giving our clients what they need to feel comfortable.
How long has Merganser been a Charles River customer, and why did you originally select Charles River IMS?
We started on Charles River back in 2004. At first we implemented the Compliance module only. In early 2005 we implemented the trading order management system, as well as the Manager Workbench.
This two-phased approach allowed our investment team to digest the new technology, get comfortable with the system, and migrate their workflow so that it wasn’t a drastic change for them. Why we picked Charles River? We thought that Charles River was the most mature product at that time, and I think it’s served us well since 2004. Clearly it’s made us more scalable.
Being able to service different investment guidelines has been critical to us and our growth. It used to be that our trading system was Excel, ‘sticky pads’ and Bloomberg terminal. Now, it’s all online. We send trades with different workflows to various people and they can get what’s important to them on their desktop, and not worry about things that may not require their attention. It’s been quite an efficiency gain for us.
How has Charles River IMS, particularly the Manager Workbench, streamlined workflows and created efficiencies for your firm?
The Manager Workbench allows each of our investment professionals to use the system in a manner that is meaningful to them. For example, on our corporate or credit team it’s very important to understand parent exposures and ultimate parent exposures. The nice thing about the Workbench is you can take various pieces of data, dice them, slice them and look at them from a perspective that’s helpful to you. It’s not one size fits all; it’s what’s meaningful to me as the Portfolio Manager to help me make my decisions.
The flexibility of getting Charles River data allows us to write certain customized reports and marry information from disparate systems so that the investment professionals get what they need on one piece of paper. It’s really been a good model for us.
When we have a prospect in and we do a Charles River demo, you can see the comfort that it gives them that we have a system in place that allows us to manage our orders. There is built-in compliance and proper controls and procedures in terms of logging of information and who’s done what, that they apparently don’t see in other shops. When we show them the system, you can see the light bulb go off. Some clients are surprised at the level of technology that we have for a firm our size.
How does Charles River IMS help your firm reduce risk?
We have pre-trade, post-trade and batch compliance. A lot of shops don’t use post-trade compliance, they only use pre-trade and batch. For pre-trade we’ll say, ‘Can we buy this investment at all?’ If the answer is yes, post-trade helps to figure out how much is the right amount, or if we have gone over the limit. Pre-trade will help you do that, but when you get the final execution, if you got a certain price on the trade, depending upon how close you want to come to the limits, that may or may not push you over.
Being a user of the system for the past seven plus years, we’ve come to understand a lot about how the system works; how the data is structured. This has helped us be self-sufficient when we need to be yet able to go back to Charles River and ask questions intelligently to say that this piece of data which I know is stored in this table and this field doesn’t look right to me. We’ve used other systems where we have no access to data or tables, and it’s hard to explain or articulate an issue or a need to the vendor. Being a mature client has helped us become more efficient as well.