Investment management software is the set of systems that a fund company uses to hold, trade, value and report the money it invests. Mutual funds, pension funds, insurers and private-equity funds all run on it. The fund's investors never see it.
The software does five jobs. It holds every position: each share, bond or other asset the fund owns, and how much of it. It decides and records every trade. It values the portfolio each day, which means it works out what everything the fund holds is worth. It checks the portfolio against the rules, such as limits on how much the fund may put into one company. And it produces the accounts and the reports for investors and regulators.
For funds that buy listed shares and bonds, one investment management system can do all five jobs, from placing the order to doing the accounts. Some insurers and companies use separate investment accounting and reporting software for the last job. Every day, the fund's own records must match the records of its custodian bank and of post-trade processing. A custodian bank is a bank that holds investments safely on behalf of their owner. This daily check is called reconciliation.
Private funds need different tools, because their assets do not trade on a stock exchange. Take, for example, a venture capital fund that owns part of fifteen start-ups. Fund administration software keeps the fund's accounts and its records of investors. Private market data software reads each start-up's reports and estimates what the fund's stake is worth. Cap table management records who owns what share of each start-up. When the fund buys into a new company, the documents are shared and checked in a virtual data room.
India builds a large part of this software. Two of the world's largest investment management software companies have engineering teams in Delhi NCR and Hyderabad.