Rule 22e-4 is specifically aimed at quantifying liquidity risk in most mutual fund and ETF portfolios – particularly, the risk of a fund being unable to meet redemption requests without significant impact on its remaining investors. The regulation comes with a host of challenges leaving fund managers looking for an efficient, scalable solution.

In the post-Solvency II world, asset managers with insurance clients are grappling with additional layers of complexity. In addition to incorporating the cost of capital into the asset allocation process, they are also required to fulfill an extensive set of reporting obligations, leading them to partner with external vendors to implement a cost-effective and efficient workflow.

While building composites is common among institutional asset managers, private wealth managers have not adopted them to the same degree – but a shift is already underway, and this will continue to change as wealth managers face renewed scrutiny.