Volatility is back. Again. Rates, geopolitics, inflation—take your pick. Every day, something moves, and the temptation is always to react. Volatility does not just stress the market. It stresses data systems.

Geopolitical conflict, energy price instability, and shifting interest rate expectations have pushed the VIX Index to an average of 24.6 this year—well above its 10-year mean of 18.4 (CBOE, Mar 2025). Meanwhile, MSCI reports that daily equity price swings of 1% or more have occurred in over 40% of trading sessions in developed markets so far this year.

For investment managers, this is not just background noise. These are conditions that materially affect capital allocations, portfolio construction, client reporting, and operational priorities.

But volatility does not just stress the market. It stresses data systems.

Volatility tests infrastructure, not just strategy
When volatility spikes, strategies change. But if the data infrastructure underneath those strategies is outdated or fragmented, investment teams cannot move.

Consider this: according to a 2024 Accenture global survey, 78% of investment professionals cited “limited integration between systems” as their top barrier to acting quickly on investment insight. And in the family office space, a Campden Wealth report from late 2023 found that 53% of SFOs still manage alternative asset reporting manually or outside their core systems.

These are not cosmetic issues. In volatile conditions, they slow decisions, introduce risk, and erode trust—internally and with clients.

What really breaks down in volatile markets?
When markets get choppy, the issue is not just the market. It is internal. For many investment firms and family offices, volatility exposes cracks in the data.

• One custodian’s report does not match another’s
• Alternative assets are updated manually—once a quarter
• FX exposure is not consolidated across jurisdictions
• Real estate and directs sit in spreadsheets outside the platform

The data’s fragmented. Reconciliation is slow or manual. You cannot see the full picture, and when you do see it, it is often too late.

One CIO of a €4B multi-family office recently said, “It is not that we lack insight. We lack confidence in the insight.” That distinction matters.

So what is the real problem?
It is not the market. It is the foundation.

Most investment managers still rely on fragmented systems—PMS here, CRM there, Excel everywhere else. Each system was built for a function, not for visibility. And so, when volatility hits, the question is not “What should we do?” It is “What are we looking at?”

If you cannot answer that, you are flying blind.

What changes the equation?
It is not a new dashboard or AI overlay. It is having a clean, real-time investment data foundation—one that does not just store information but gives a usable view across every asset, account, and legal entity.

That includes:

• An independent Investment Book of Record (IBOR) for full oversight
• Automated aggregation across asset classes and platforms
• Standardised and normalised data that flows into reporting, risk, accounting, and client service
• Historical depth and auditability—not just real-time views

When those conditions are met, firms stop spending time reconciling and start spending time deciding.

Making volatility work—not just survive it
Volatility, by definition, creates movement. But movement can only be acted on if you understand your position.

Here is what that looks like for different types of firms:

Single Family Offices (SFOs)
With diversified and often unconventional portfolios—private equity, venture, real estate, collectibles—SFOs need a clear, integrated data layer to monitor total wealth and risk exposure across entities and time zones. Volatility only heightens the need to track performance and liquidity in near real-time.

Multi Family Offices (MFOs)
MFOs face scale-related complexity. Multiple family structures, regulatory jurisdictions, and reporting preferences. In volatile periods, each family may expect tailored guidance. This requires a foundation of reliable, segmented, and up-to-date data.

Discretionary managers
Your core task is to act on behalf of the client. But if asset allocations and exposures are outdated or incomplete, discretion turns into delay. Volatility demands agility, which in turn depends on trusted data infrastructure.

Advisory managers
Clients want clarity and explanation. Not just that the market moved, but what it means for them, specifically. That is impossible to deliver if you are working off fragmented sources or manually assembled snapshots.

Investment managers (broadly)
Regardless of structure, the common denominator is this: volatility increases pressure on operational confidence. Whether it is for rebalancing, compliance, or client communication, reliable investment data becomes the prerequisite—not the nice-to-have.

What the data is telling us in 2025

A few key signals from the first quarter:

• BlackRock's Q1 Outlook (2025) highlights a surge in institutional demand for private credit, citing “a need for yield in an environment where public markets are hard to read in real time.”
• Morningstar Direct (Jan–Feb 2025) reports an increase in rebalancing trades across managed portfolios, driven by unexpected divergence in asset class performance.
• Meanwhile, State Street’s Investment Manager Outlook notes that 67% of surveyed firms plan to increase technology spend this year, specifically targeting “data standardisation and unification.”

Volatility has not just changed portfolio allocations—it is exposing the limits of legacy infrastructure.

No easy fix—but a clear direction
There is no single system or solution that eliminates the complexity. But there is a pattern among those who handle volatility better:

They have prioritised data readiness—and built systems that are as flexible as the markets are unpredictable.

That does not always mean replacing legacy tools. In many cases, it means layering in a robust data foundation that supports them. One that allows you to ask any question of your investments—across time, across systems, across asset types—and get an answer you can trust.

When that is in place, volatility becomes something else: not a threat, but a filter. It reveals what matters, what is exposed, and what is worth acting on.

Read the original article here.