Over the past few decades, asset owners around the world have sought to improve their internal capabilities; pushing back against external service providers in a bid to retake control over their investments. After the ‘perfect storm’ that hit pensions in the early 2000s (which linked the Internet-related market collapse with low interest rates) and then the massive hit to returns from the global financial crisis, many asset owners recognized they needed a new approach to investing. The shift for asset owners from indirect investing to direct investing was perhaps the biggest trend in investment management over the last decade. Today, this trend towards improving internal capabilities continues, but it’s taking on a new area of focus and intensity: data and technology.
Over the past few years, the more innovative and ambitious funds have pursued new data and tech strategies, with a view to facilitating data-driven decision making. Even still, only a small fraction of investors we come across have graduated out of the world of spreadsheets. Excel is often the go-to system for critical portfolio modelling and projection tasks. Spreadsheets are flexible, but they come with serious problems: They cannot manage large amounts of data efficiently; there is no single source of truth powering all of the multiple versions of spreadsheets; and they are error prone.
In a world of driverless cars, drone-delivered pizzas, and artificially intelligent speakers lurking and listening to your every sound… we can agree that spreadsheets won’t cut it. Instead of spreadsheets, these investors need software. And so we started RCI, which is a technology company I co-founded in 2017 with Kanishk Parashar and Joe Lonsdale. RCI delivers data and information directly to the Chief Investment Officer, with a view to helping her make smarter decisions about the future path of the fund’s portfolio.
Practically, we do this by ingesting and modeling three types of data:
With these three data sets in the software, RCI simulates portfolios and projects a fund’s key operating metrics (e.g., liquidity, cash flows, fees and costs, holdings, returns, etc.). We can then ‘stress test’ those metrics with different scenarios (which we do by toggling between different sets of your assumptions, such as base case or GFC).
RCI differentiates itself from most other investment technology providers in that it is a forward looking tool that uses granular position- and fund-level data to assist top down decision making. Software allows us to seamlessly connect the top (total portfolio) with the bottom (specific assets) in order to ensure investment plans are on the right track.
Once adopted, the RCI system will hopefully become the engine powering all investment decisions. RCI will be the CIO’s dashboard to understand the fund’s current position and, more importantly, the fund’s trajectory, under different scenarios. The tool’s functionality also allows for regulatory mandated reports that need to be generated by funds on a regular basis, such as liquidity management reports or fee/cost reports. Investors will rely on RCI for both internal and external reporting of key fund metrics, making it ubiquitous with any fund’s operations and functionality.
In short, the asset owner community of investors are critical actors in our world. They manage $100 trillion in assets, while serving as the backbone of capitalism and our social welfare state, at the same time! Given the importance of these funds for our collective futures, they deserve far better technology! And that’s what RCI is doing and why it exists.
About the Company:
RCI was launched as a mission-driven commercial enterprise to help asset-owner investors solve their most pressing technology problems. The company was formed to co-develop software with 4 large asset owner institutional investors located in Australia and Europe. RCI was granted access to these funds’ know-how and expertise as well as key staff within these organizations.
We have brought together a world class team in silicon valley that consists of engineering leaders from the world’s leading technology companies including Microsoft, Paypal, Ebay, Samsung and includes graduates from Stanford, Johns Hopkins and Oxford University. Our software engineering team all have extensive experience in building products for customers in a variety of fields but specifically within the fintech space. This along with our pilot program has ensured we have built software with clear product market fit and usability in mind. Our technical team is complemented with founding and business development members that have unprecedented knowledge and alignment with our target customer network. These members have been recognized as the leading academics and thought leaders on the governance and strategy of asset owner institutional investors. The combined technical capability and domain expertise provides RCI with a unique competitive edge to successfully partner with asset owner investors around the world.