Overcoming Total Portfolio’s Challenges

Legacy Silos: Cultural and Organizational Resistance

The most common barrier to implementing TPA lies not in technology or data but in mindset. Most asset management organizations, particularly those managing both public and private assets, are structured around asset class verticals. These silos are reinforced by distinct investment teams, dedicated risk models, and performance benchmarks specific to each sleeve.

Transitioning to a TPA model demands a conscious reframing of roles and often-correlated relinquishment of some autonomy. Critically, TPA upends traditional incentive structures by shifting the focus from asset-class-relative performance to enterprise-level outcomes. In a siloed model, each team is rewarded for beating its own benchmark, but under TPA success is measured by the total portfolio’s results. This change can be disconcerting: public market teams may feel disadvantaged if they are evaluated on absolute returns instead of just outperforming an index, while private market teams might worry that long-term illiquidity is undervalued in short-term comparisons. This tension is real; addressing it at an organizational level requires clear C-suite sponsorship and a compelling enterprise vision that balances accountability with collaboration.

Solution Tactic: Leading adopters have succeeded by creating a centralized investment committee or portfolio strategy group that works alongside asset class heads, not above them. Rather than eliminate specialist expertise, TPA encourages those perspectives to feed into an integrated view. Over time, compensation models can be recalibrated to reflect team level contribution to total portfolio performance and risk adjusted returns, not just siloed outcomes.

Data Fragmentation and System Incompatibility

TPA demands a consolidated and real-time view of positions, exposures, and performance. Few firms – even those with substantial AUM – have achieved a unified data architecture that spans public and private assets. Public assets are typically well covered by OMS, PMS, and market data systems. In contrast, private investments often rely on manual processes, spreadsheets, PDFs, and illiquid asset valuations with quarterly lags.

This reliance often results in timing mismatches, incomplete exposure mapping and inconsistent risk assessments. Without harmonized data, the promise of total portfolio risk analytics and capital efficiency cannot be realized.

Solution Tactic: Depending on the organization’s current infrastructure and future goals, two approaches can help build a unified data foundation:

1. Enterprise Data Platform: Implement a comprehensive enterprise data platform as the backbone for all investments. This system can ingest data across public and private sources, normalize formats, and centralize exposures. It also integrates third-party fund-level data (e.g. for private equity or private credit) and accounts for complexities like waterfall logic, fee structures, and capital call schedules – establishing a strong foundational dataset for the total portfolio.
2. Hybrid Integration: If a full platform transformation isn’t immediately feasible, a hybrid approach can bridge existing silos. This involves layering integration tools or a data hub on top of current systems to aggregate information from various sources. Enhanced data enrichment can be achieved by pulling in external data feeds and using bespoke solutions to capture unstructured inputs (for example, parsing PDF reports or capital notices for private assets). This approach addresses immediate gaps while laying the groundwork for a future enterprise solution.

In both cases, embedding data governance is essential to ensure accuracy and accountability.

Risk Modeling for Illiquid Assets

Another challenge is analytical. Public assets lend themselves to risk factor modeling, Monte Carlo simulations, and market-driven scenarios. But modeling risk for private investments – especially across sectors like venture capital, direct real estate or infrastructure debt – is inherently more complex.

The absence of frequent pricing, limited observable volatilities, and non-linear return patterns make traditional VaR or stress testing inadequate. Risk aggregation tools often struggle to ingest hybrid or custom vehicles that contain both public and private elements – think “multi-strategy” or “capital solutions” focused investment teams.

Solution Tactic: Innovative firms are combining traditional risk models with qualitative overlays and proxy-based factor modeling to better estimate the behavior of illiquid assets in various market regimes. For example, some maintain shadow NAV calculations or apply cash-adjusted mark-to-market valuations to their private holdings between official reporting periods, which helps smooth out timing lags. Others incorporate available market proxies to inform their models – using internal rate curves for real estate and private credit or public market equivalent (PME) indices to benchmark private equity. These techniques have started to close the gap caused by infrequent pricing and valuation lags, but the key is transparency: leadership must understand the assumptions behind such models and view them as directional tools rather than precise instruments.

Governance and Fiduciary Oversight

Boards, regulators, and external stakeholders often expect detailed reporting segmented by asset class, strategy, or mandate. Transitioning to a TPA model must be carefully aligned with ongoing governance and regulatory requirements, especially for fiduciaries such as pensions and insurance asset managers. The perception that total portfolio management dilutes transparency or accountability can trigger resistance.

Solution Tactic: Rather than replacing traditional reports, TPA adds an enterprise-level overlay. The best-in-class approach supports dual lenses: maintaining traditional reports for stakeholders while simultaneously layering on cross-portfolio analytics for internal decision-makers. Many regulators are now encouraging aggregate-level risk views and enterprise liquidity profiles, making TPA-aligned reporting a compliance asset rather than a burden.

The Path Forward

A Total Portfolio transformation is not a simple technology switch or a one-time organizational shuffle. It’s a new way of thinking and managing that requires cross-functional alignment, data integration, and a deliberate change management strategy. But the momentum is building. Forward-looking asset managers and asset owners recognize that while the road may be challenging, the payoff – better risk-adjusted outcomes, greater agility, and stronger governance – is worth the journey.

For too long, the investment industry has wrestled with delays in private market data—quarterly GP reports and slow, manual LP processes that keep portfolio views incomplete. SimCorp is changing that, delivering a unified book of record across all asset classes so private market data flows seamlessly into Total Portfolio views. The opportunity is clear: it’s time to leave legacy workflows behind and embrace timely, integrated data that powers faster, smarter investment decisions.

 – Allen Zimmerman, Managing Director, Head of Americas at SimCorp

Stay tuned for part 3 on this series, ‘Unlocking the Power of Total Portfolio – Unified Data for
Asset Managers.’

To read part 1, visit Understanding the Total Portfolio Approach.