Holistic Data Management: How Asset Owners Can Turn Data into a Competitive Advantage

By Peter Sherriff, Director of Product Strategy, APAC.

Asset owners across the globe are increasingly data driven. Whether evaluating external manager performance, analyzing market and economic scenarios, or designing new investment options for their members, accurate data is key to success. As a result, asset owners have begun to broaden their view of data management from merely a regulatory reporting requirement to also being a competitive differentiator that enables faster insights into investment performance, demographic trends impacting their beneficiaries and potential liquidity disruptions in capital markets.

This change in focus has fueled a growing need for unified data management across an asset owner’s entire organization. Whether firms manage assets internally or outsource to external managers, the ability to access and leverage accurate, timely data is increasingly seen as an imperative.

More Data, More Often and More Timely

Several trends are driving asset owners’ interest in holistic data management practices and solutions:

• Increased investment in illiquid and opaque asset classes such as private equity, real estate and infrastructure, where data typically lacks the standardization of traditional asset classes
• Fund-of-fund structures requiring look-through across complex hierarchies of external managers and sub managers
• Growing adoption of liability-driven investing (LDI) by defined-benefit pension schemes requiring the ability to understand liability cash flows and monitor derivatives exposures
• Regulator and stakeholder demands for more current and frequent performance and risk reports, rather than backward looking monthly or quarterly reports

For asset owners that manage some assets in-house, traditional data including positions, investable cash and exposures is typically available from internal systems. Obtaining timely data from an organization’s external managers proves more challenging, requiring new workflows and changes in operating policies.

Data challenges are especially acute for organizations managing private assets. Recently commissioned research found that 85% of asset owners say it takes up to a week or more to run scenarios across their portfolios, a lag that significantly reduces insight when markets are moving rapidly. More than two-thirds of respondents mentioned significant opportunity costs because of problematic private markets data. The survey found that “sourcing high quality opportunities, collecting and processing the necessary data, and other related administrative tasks all take up more time in private markets, leaving staff with less time for other tasks and limiting their ability to expand the portfolio.”

Aggregating data from custodians, outsourced asset managers, ESG data vendors and benchmark providers to enable a holistic view of asset owner investment history is a daunting task. In conversations we’ve had with asset owners globally, the majority of organizations acknowledge they need a tool to insource data acquisition and management. Without having this data in-house, they lack the ability to explore the breadth and depth of information embedded in the data to derive actionable insights.

Gaining Insight Through People, Process and Technology

Achieving a holistic and actionable view of asset owner data is a four-part undertaking that requires firms to:

• Leverage connectivity, extraction and aggregation tools that can assimilate and validate the many disparate data sets across custodians, external asset managers and data and benchmark providers.
• Develop a scalable architecture capable of capturing and storing data at any level of detail and historical depth.
• Establish data governance standards and processes to ensure that appropriate stewardship practices are in place to deliver high quality data; creating and maintaining a data catalog listing meta-data and other salient attributes of each data element is key to helping investment professionals understand data context and ensure appropriate use cases.
• Deploy self-service data visualization and reporting tools capable of delivering role-appropriate, fit-for-purpose data views to both internal and external stakeholders.

Successful data management relies on a combination of services and technology. Human experience and expertise with an organization’s data are critical to establishing context, discovering and resolving data quality issues, and communicating with data owners to uncover connections across disparate data sources.

Pivoting to technology, the new generation of cloud-based data warehouses streamline access to information across the organization. The warehouse serves as the single source of truth, eliminating the need to reconcile contradictory data. With on-demand scalability, organizations no longer need to maintain physical servers and hard drives. Extensibility enables new data sets to be on-boarded with minimal effort or disruption to existing data models.

Perhaps most importantly, the ability to capture and store massive volumes of data drives more nuanced investment and allocation decisions and supports the ability to generate new insights through the application of machine learning. Until quite recently, the notion of capturing and storing large quantities of historic data seemed like an expensive luxury.

Holistic data management also improves auditability, capturing when data was created and transmitted, if or when it was altered and why, and whether it was validated. A centralized repository also minimizes inefficient data movement across multiple data stores which can lead to potential security breaches.

Data management platforms built on an open architecture and offering robust API support are key enablers to accessing best-of-breed management tools and innovative data sets from multiple vendors. One example is the growing popularity of data marketplaces offering structured and unstructured data sets covering everything from historic, tick level prices across instruments to entity relationships, geolocation, weather, shipping, and market sentiment.

Data as Transformative

Organizations can no longer treat data management merely as a regulatory exercise. Instead, forward thinking asset owners increasingly understand the transformative impact of a unified data management platform as a competitive differentiator. Learn how we help asset owners capture, validate and leverage the wealth of data scattered across their custodians, service providers and asset managers to drive value and better service beneficiaries and stakeholders.