Axioma Launches axiomaBlue, a Cloud-Based Environment to Efficiently Create, Implement and Scale Unique Investment Strategies for Competitive Advantage

A combination of three main features differentiates axiomaBlue^TM from existing investment-management offerings.

First, axiomaBlue^TM provides fully interoperable and integrated access to Axioma’s suite of award-winning best-of-breed solutions for multi-asset-class enterprise-wide risk management, portfolio construction and optimization, performance attribution, custom risk models, and analytics—solutions designed specifically to be adapted and tailored to a firm’s specific objectives.

“Solutions that can be customized to a firm’s own investment process are vital to the development of competitively superior strategies and products,” said Ceria. “Using the same off-the-shelf tools as the competition immediately puts a firm at a disadvantage.”

Second, axiomaBlue’s^TM cloud-native, API-first architecture gives clients integrated access to both the environment and the cloud’s on-demand computing power, to scale and to handle heavy duty analytics and data. The cloud enables research teams to build, backtest and bring to market new products and strategies faster and at lower cost, while also providing an exit strategy for firms saddled with the burdensome costs of legacy systems and technology.

“Many systems touted as cloud-based are, in fact, merely cloud-hosted, meaning they are older systems and architectures that have simply been migrated to the cloud,” noted Ceria. “axiomaBlue’s^TM cloud-native architecture—built and deployed more than five years ago—has been steadily tested, proven, developed and enhanced ever since.”

Third, axiomaBlue^TM is an open environment, enabling the integration of complementary third-party best-of-breed solutions, such as trade-order management systems, IBOR, data and accounting systems.

“Our open environment will give clients the option of making axiomaBlue^TM either an extension of their investment-management system, or, literally, the system itself,” said Ceria. “axiomaBlue^TM is all about access to best-of-breed solutions, the flexibility to customize, the power and scalability of the cloud, and the cost efficiencies that are a direct result of all those things combined.”

axiomaBlue^TM will initially be offered with Axioma’s API-first best-of-breed risk solution, including new business-intelligence and dashboard capabilities. The complete suite of Axioma’s portfolio and risk management solutions, plus portfolio optimization and multi-asset performance attribution, is now being added to the environment. Axioma will also embrace best-of-breed providers of third-party business-critical capabilities that will be seamlessly integrated into the axiomaBlue^TM environment.

Founded in 1998, Axioma introduced its first product—Portfolio Precision^TM—in 2002, an innovation that leveraged the latest technology to help investment managers improve performance. In 2006, Axioma turned its attention to risk models, with three key innovations: methodological transparency, the patented Axioma Alpha Factor^TM, and fully updated daily risk estimates for both fundamental statistical factor models. Many initially dismissed daily risk models as overkill, until the onset of the Global Financial Crisis in 2007. In 2011, Axioma launched the revolutionary Risk Model Machine^TM, which enabled clients to build customized risk models specifically tuned to their own investment processes, proven advantages that axiomaBlue continues to echo. In 2013, Axioma Risk was launched—by far Axioma’s most ambitious and complex to date. Axioma Risk broke new ground by providing a consistent view of multi-asset class risk across the front, middle and back offices, i.e., enterprise-wide consistency, including data. 

axiomaBlue Media Q&A

Q: How does axiomaBlue^TM benefit investment managers?

A: axiomaBlue^TM gives investment managers the flexibility and power to efficiently discover, create and implement competitively superior investment strategies and products. And that, at the proverbial end of the day, is the difference between winning or losing in today’s competitive environment for asset management.

The fact is, success in asset management can be defined in relatively simple terms. For active managers, it’s ultimately about creativity—the ability to identify and capture elusive alpha. For the purely passive, it’s a matter of taking the product mandate and implementing it as efficiently as possible. And for those developing customized products, it’s all about customizing at massive scale.

The difference in today’s environment is that without integrated state-of-the-art systems, technology, infrastructure, architecture, and best-of-breed solutions, tools and data, cost efficiency and scalability are out of reach and survival is unlikely. The investment processes of investment managers must be driven by flexible, powerful systems that provide a consistent and integrated front-to-back solution for investment-management—and can be tailored to a firm’s own approach—all at a reasonable cost. And that’s what axiomaBlue^TM does.

Q: How is axiomaBlue^TM different from other environments?

A: The most important difference between axiomaBlue^TM and other solutions is that axiomaBlue^TM is built around Axioma’s complete suite of best-of-breed solutions for portfolio- and risk management. From portfolio construction to performance attribution to custom risk models to multi-asset class risk management, Axioma is a recognized innovator and creator of flexible, sophisticated solutions that are the core of any investment process. The flexibility and adaptability of our solutions is critical, because they enable investment managers to tailor and fine-tune our tools to their own investment processes, while the sophistication is key to differentiation and the ability to efficiently develop unique investment concepts into actual strategies and products. In today’s highly competitive environment, efficient discovery, differentiation and implementation are essential to success.

The monolithic solutions providers—such as BlackRock and Bloomberg—do not have the flexibility or sophistication of Axioma’s best-of-breed solutions. Those systems force users to adapt to them, while axiomaBlue^TM is customized to the investment process of the firm. Beyond that, those systems are not cloud-native, but cloud-hosted, which has a number of disadvantages. Cloud-hosted solutions use the cloud to power older solutions with faster technology. It’s like putting a jet engine on a prop plane. Will you go faster? Yes—but the gains are limited. In contrast, cloud-native solutions are purpose-built for the cloud, and that’s where architecture—the way those solutions are built—makes an enormous difference.

Finally, the monolithic systems are closed, not open. axiomaBlue^TM will ultimately give its clients best-of-breed across the board, not only in terms of portfolio construction and risk management, but trade and order management, IBOR, data sources, etc.

Q: What about the growing number of fintechs that are talking about solutions that sound much like axiomaBlue^TM?

A: Again, axiomaBlue^TM is built around Axioma’s complete suite of proven best-of-breed solutions for portfolio- and risk management. The cloud-based axiomaBlue^TM environment has been continually enhanced for the last five years. So the big difference between axiomaBlue^TM many of the other solutions being presented is that we have products up and running on axiomaBlue^TM right now. And the roadmap ahead is clear and executable.

Q: How is it that Axioma—a relatively small player—was able to create a sophisticated environment like axiomaBlue^TM when no one else in the industry has?

A: We’d like to be able to say it was our “vision,” and in some ways it was, but there was also an element of timing. The seeds for axiomaBlue^TM were sown in 2013, when we launched Axioma Risk—a very sophisticated and innovative enterprise-wide multi-asset class (MAC) risk-management environment. Axioma Risk was truly unique in the industry. First, it was cloud-based. At a time when most financial institutions dismissed cloud computing as far too vulnerable from a security perspective, Axioma pioneered and embraced the cloud for its scalability, on-demand computing power and lower cost of ownership. Second, Axioma Risk broke new ground by providing a consistent view of risk across the front, middle and back offices—in other words, enterprise-wide data consistency. No longer did the front and middle offices argue over separately computed risk data. Regulatory reporting was also completely in sync. Finally, Axioma Risk was designed from the ground up as a multi-asset class solution—an attribute shared by few existing solutions. So these notions of flexibility, the cloud, data consistency, enterprise-wide access, and sophistication were all baked into Axioma Risk.

To accomplish all of the above, a complete modernization of Axioma’s architecture and infrastructure was required. As a result of that process, we in effect paved the way for what was to come. The environment first created to support Axioma Risk steadily evolved over the years and it is now the thoroughly tested, proven and state-of-the-art foundation on which axiomaBlue^TM is built.

Q: What are the key features and strengths of axiomaBlue^TM from a technology perspective?

A: First, axiomaBlue^TM is a cloud-native solution designed from the ground up to take full advantage of the power and ongoing state-of-the-art development of cloud computing. Second, clients can easily and selectively access Axioma’s entire suite of tools via flexible APIs, which means that solutions can be tailored by the client to meet their own specific needs. In other words, clients have the option of using a little or a lot of axiomaBlue^TM, but always the ability to scale as their organization grows. So it is very much a “have your cake and eat as much as you like, whenever you like” solution. And with the ability to access third-party best-of-breed solutions, clients have option of building a fully customized investment-management system around axiomaBlue^TM.

Again, competing solutions force users to adapt to them, whereas axiomaBlue^TM is customized to suit the specific needs of the client.

What’s more, axiomaBlue^TM is built on the strengths of hyper-scale cloud provider Microsoft Azure, which leverages a global network of Microsoft-managed data centers, providing unparalleled scalability, reliability, security, encryption, redundancy, and on-demand power. Axioma and Microsoft have partnered to ensure that axiomaBlue^TM remains at the forefront of cloud technology.

Q: What drove you to create axiomaBlue^TM

A: axiomaBlue^TM is the result of countless discussions with clients and our own sense of what is needed today. It’s no secret that the business of investment management has changed—certainly in the 10 years since the global financial crisis, but the transformation began even before that. Competition has become fierce. Active managers were the first to feel the pain on margins, with the proliferation and success of passive investment options. Now, of course, there is competition in the passive space itself, as Fidelity’s new no-fee index fund attests.

Technology is another huge issue. In the past, investment firms built their own data centers and systems as a means of maintaining control and security. But two things happened. Investment in those systems lagged in the wake of the global financial crisis, just as cloud-computing began to gain traction. The cloud was initially rejected by the financial industry as too vulnerable from a security point of view. And that left firms struggling with the headaches and costs of trying to maintain and adapt their own legacy systems and technology.

Needless to say, the cloud has now arrived. With cloud-enabled “infrastructure as a service,” investment managers have a way to finally bid adieu to their legacy systems. The on-demand power of the cloud gives investment managers the ability to scale assets under management, to drive revenue growth and reduce the effect of margin compression. That same on-demand power handles complex heavy-duty analytics, enabling research teams to build, backtest and bring to market new products and strategies faster and at lower cost, providing further fuel for competitive advantage. Beyond that, the cloud is now the sandbox in which the best developers play, creating new architectures that enable unprecedented interoperability, interactivity and flexibility.