The Hindu : Business : Managing millions the Indian way

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Monday, Jul 04, 2005

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Business

Managing millions the Indian way

Anand Parthasarathy

Solution used by pension funds in U.S., Europe

BANGALORE: From March this year, the Virginia Retirement System, one of the largest pension funds in the United States that covers all public employees of Virginia state, has been using a new Web-based tool to optimally invest its $43 billion capital. It is a solution that helps to fund to proactively manage risk, increase returns to its members, monitor and adjust dozens of investment portfolios "on the fly" and round the clock, using the special suite of computer algorithms and programmes.

The largest pension fund in the Netherlands, the Dutch Metalworkers Fund, has been deploying the same tool since September last to manage its 14 billion Euro ($24 billion) corpus. The New York-based FX-Concepts, a $15 billion-currency management fund, is also trying to generate "alpha" — jargon for returns over and above the market rate — by harnessing the tool, which is called `AlphaEngine.'

The technology behind the tool is the brainchild of a team of software professionals at the Bangalore-based Quasitum (India) Pvt. Ltd, the research and development arm of a U.S.-based, Indian-owned company, Mcube Investment Technologies.

Srinivas Bette, Texas-based chief technology officer with MCube and president of Quasitum, was in Bangalore last week to anchor a day-long brainstorming session with the 17-strong creative team. They were throwing up ideas that would crystallise into the next release of AlphaEngine.

A B.Tech in Chemical Engineering from the Indian Institute of Technology-Madras and a Ph.D from Houston, Texas, Dr. Bette managed research and development for Mobil Oil Corporation for 17 years. He then joined hands with Arun Murlidhar, U.S.-based fund manager from World Bank and J.P Morgan, to start MCube in 2002.

Their entirely Web-driven portfolio construction and risk management solution has its heart in a huge data centre in Texas from where they provide "management muscle" to dozens of funds worldwide. The niche solution has no big competitors and the company is test-running it for potential clients in new markets such as Japan.

"I can, with certainty and pride, say that our people in India have created and delivered a world-class financial technology in AlphaEngine," Dr. Bette told The Hindu . "The proof is in the responses we get from our clients and peers; they are astounded by the innovation and quality coming out of our India centre." The system, which runs on a .Net backbone, was lauded recently by Microsoft and short-listed with a handful of innovative global software solutions. However, it works equally well with other client systems such as Java and Linux, Quasitum engineers said.

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