IMTC secures VC funding, focuses on SMAs

BY SourceMedia | MUNICIPAL | 05/16/22 12:35 PM EDT By Jessica Lerner

IMTC, a provider of fixed-income investment management technology, secured its first external funding round, led by venture capital company Nyca Partners, allowing the previously privately funded firm to scale software development and client success teams.

This round of funding will help IMTC expand its software engineering resources, allowing it to improve its optimization engine and expand its list of industry and data connections, the firm said. IMTC said it is focused on developing solutions that enable efficiency in managing separately managed accounts (SMAs).

?We're looking to triple our development team and bring on resources that will allow us to scale and capture the opportunity we see in the market,? said Russell Feldman, IMTC?s new chief executive officer. ?Fixed-income technology has been neglected for so long, having the funding and the investment partners to work with to modernize this market is super exciting.?

More than 75% of the proceeds will be used to hire software engineers and client success resources who will be deployed to further enhance existing offerings and design solutions in the exchange-traded fund and custom indexing arena, he said.

Given that the majority of its clients are muni focused, this funding round will help the firm expand the solutions IMTC offers for muni SMA managers. The financial details of the deal were not disclosed.

Feldman said he is excited about the partnership with Nyca given their expertise in capital markets and limited partner network, which has the know-how and connections to assist with growth.

Over the past year, IMTC has seen an increasing number of RIAs and institutional managers looking to simplify and automate their fixed-income investment processes. Through its cloud-native investment management system, it allows income managers to establish, optimize and rebalance accounts faster and with greater insight, Feldman said.

"Clients are demanding more customization and flexibility in their investments," Feldman said. "Asset and wealth managers are being asked to account for investors? preferences around [environmental, social and governance], socially responsible investing and impact investing, in addition to the more typical (but still individualized) restrictions and targets they want in place."

IMTC differentiates itself through its portfolio optimization engine, a tool that doesn?t appear to be offered by legacy providers.

"Our platform suggests optimal buys and sells across hundreds of portfolios in seconds, while accounting for unique guidelines, targets and investment objectives across each account," Feldman said. Since IMTC?s technology is cloud-native, it can process the massive number of calculations required to provide optimal outcomes.

IMTC has assembled a team that understands the needs of fixed-income investors, he said, comparing this to legacy systems that have often been developed for equity managers, which doesn?t always align with bond managers? needs.

?Having the right fixed-income experts, we can build solutions that rethink workflows in a dynamic way and automate manual processes,? Feldman said. ?This team allows us to address the unique challenges of the bond markets.?

Feldman said that as IMTC continues to expand its business, he sees an opportunity in the custom indexing space.

?Custom indexing will dominate the market over the next five years, and IMTC is working to enable fixed-income managers to do this at scale? he said. ?This capital enables us to bring a solution to muni managers that truly simplifies the fixed income portfolio management process.?

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.