Upstream admins accounts, directs trades for fund manager

FWR Staff

2 July 2006

Asset-processing provider sees confluence of portfolio-management, trading. American Independence Financial Services (AIFS), formerly Arrivato Advisors, is running its Lifecycle mutual funds with Upstream Technologies helping to administer its and execute trades directly to brokers "of choice."

Competition in the mutual-fund space calls for differentiation, says Eric Rubin, president of New York-based AIFS. "We chose to differentiate ourselves by combining innovative management of our Lifecycle Funds with advanced technology." Upstream's technology, he adds, "allows us to test our market insight, evaluate trades and measure their impact prior to execution. This has enabled us to make more informed decisions and drive down operating expenses for our clients and investors."

Future now

At the account level, AIFS portfolio manager Jared Goldstrom says Upstream lets him "integrate risk into my decision criteria, enhancing my ability to replicate the performance of our funds to their respective indexes." In turn, he says, this consolidation creates efficiencies and reduces expenses. Meanwhile, with the "preferred" third-party trading that Upstream makes possible, "I am able to effectively act as portfolio manager and trader with complete transparency and control throughout the investment process," Goldstrom adds.

According to Mark Hoffman, president and CEO of Boston-based Upstream, "industry prognosticators have predicted that economics and technology will eventually drive the convergence of the portfolio manager and securities trader roles at many firms." AIFS' decision to with Upstream's investment- and order-management systems shows "that money managers need not wait for the future to realize the improved operating efficiencies of this new paradigm, but can begin doing so today."

Thomas Prior, head of sales at Upstream, says his firm's move to extend investment processing to include trade routing, a new feature, comes in response to client demand. "We have been seeing a merging of the trading and portfolio management tasks," he says. "Many managers" - especially those with between $1 billion and $10 billion in assets under management - "want to be able to direct their trades and follow them through to execution."

AIFS is the advisor for American Independence Funds, which provides Dow Jones index-based funds as well as equity and fixed-income products to institutional and retail investors. It manages $560 million, according to its latest ADV filing with the Securities and Exchange Commission.

Upstream's client roster includes Citigroup (the front end of Global Transaction Services), Frank Russell (institutional accounts), American Century(mutual funds) and PFPC's Advisorport (overlay automation). -FWR