An Orchestrated EcoSystem

The Parallels Between a 250,000-ton Ship and the Modern Investment Manager

At first glance, the parallels between a gigantic container ship, or a multi-deck cruise ship carrying thousands of ‘souls’ (traditional maritime lore insists we refer to people onboard a vessel of any sort as souls), and the modern investment manager may not be obvious. But go below the surface of modern shipping technology and the parallel is surprisingly easy to draw.

For centuries, rough weather was the mortal enemy of the sailor – and of the ship. Tens of thousands of ships all over the world rest at the bottom of Davy Jones’ Locker as a consequence of their inability to sail through the foulest of weather.

That’s no longer the case. Most modern ships are equipped with sophisticated ecosystems of radars, highly responsive engines and advanced dynamic stabilisers that play a crucial role in managing harsh weather at sea. These orchestrated systems, especially the stabilisers which are highly sophisticated retractable fins mounted beneath the waterline - are actively controlled by sophisticated gyroscopic systems. When sensors detect the ship beginning to roll due to waves or wind, the system immediately adjusts the angle of the fins, generating lift to counteract the rolling motion.

What’s remarkable is that these stabilisers continuously adapt to changing sea conditions, factoring in variables like wind, waves, and ship speed. At higher speeds, the fins are especially effective, and when not needed, they retract to reduce drag and save fuel.

Thanks to these innovations, modern ships can maintain smoother, safer voyages - even when the weather turns stormy.

What, you might ask, has that got to do with the ups and downs of the market for investment decision-makers?

It’s all to do with the orchestrated ecosystem, a system made up of numerous component parts, co-operating to provide predictability and stability in even the roughest waters. They help keep a vessel steady, greatly improving comfort and safety for everyone onboard.

To extend this analogy, the investment management firm is the “ship”. The ship is overseen from the bridge, staffed by highly expert investment, operations and support staff all over the vessel but all reporting through the chain of command to the captain. But no ship is ever fully independent of an orchestrated ecosystem that helps it berth, load, sail, bunker with fuel, plan a voyage, you name it.

While the ship is preparing to sail – in our manager analogy, charting the voyage and loading the holds and decks with investment opportunities, making decisions about what to invest in and where to place the capital they have to invest – a whole support fleet of technology providers, data brokers, trading counterparties, custodians, fund administrators and many others in the ecosystem are assembling to help the captain guide the ship to sea.

Tugs tow her (all ships are called ‘her’) out from a berth– let’s call that “launching funds.” A pilot – the Chief Investment Officer, an Asset Allocation Committee – sets the way through the nearshore waters and disembarks to allow the crew (portfolio managers, traders, operations staff, control functions like risk, compliance, etc) to execute on the charted journey. Ships will often stop along the way to embark more passengers or cargo – that’s the role of sales and distribution, in our investment parallel.

Once the vessel is at sea, the captain – the portfolio manager – must make all the in-voyage decisions on the way to the destination (generating an investment return). That includes how and when to use the various parts of the orchestrated ecosystem that have been built to keep a ship stable.

So what, you may ask?

Portfolio managers and the investment management firms they work at are on a voyage. The final port-of-call is the delivery of a cargo of investment returns to their investors in the most efficient way possible, avoiding reefs, taking note of signals from lighthouses, taking on data from weather knowledge providers and sailing through storms.

Getting safely to the final port is the ONLY thing that matters.

That’s where we come in. At Northern Trust we are experts at helping “assemble a fleet” of orchestrated ecosystems for investment managers and asset owners who need to sail safely, no matter the weather.

We can and do help the smartest pilots and captains create an orchestrated ecosystem of solutions from inboard their ship and offboard ours that suits their specific needs. Most importantly, the pilot in the C-suite or the captain in charge of the portfolio or the Chief Operating Officer in charge of the rig, trim and seaworthiness of the vessel are ALWAYS in control.

We muster the very best of our navigation systems (our Front Office and Investment Data Science systems, our highly skilled relationship managers, sales people and business developers who can help chart a voyage), from our ‘setting to sea’ systems (Banking and Markets trading capabilities across global markets in equities, bonds, derivatives, global FX, securities lending and finance, banking and treasury) all the way through to our “ports and harbours” – our vast multi-trillion dollar network of custody, administration and safe-keeping solutions in place around the world to help thousands of asset managers, hedge funds, family offices, asset owners, pension funds, sovereign wealth funds, etc who ‘sail’ every investment ocean there is.

If you want to concentrate your energies and resources on sailing a safe investment voyage, Northern Trust can help orchestrate an ecosystem of solutions that will help you do that, efficiently, simply, cost-effectively and without fuss. Exactly as thousands of very large ships sail the world’s oceans all day every day.

We stand beside thousands of investment firms the world over and support their readiness to sail. Perhaps that’s why our iconic trademark is an anchor.

Meet Your Expert

Gerard Walsh

Gerard leads Northern Trust’s Global Banking & Markets Client Solutions group, covering Equities, Fixed Income, FX and Securities Finance.

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