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Data and Analytics: A New Toolkit for Asset Managers
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Data and Analytics: A New Toolkit for Asset Managers

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Featuring highlights of the State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit.

Featuring highlights of the State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit.

Published in Economy & Finance , Business
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  • 1. DATA & ANALYTICS Data and Analytics: A New Toolkit for Asset Managers Featuring highlights of the State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit
  • 2. DATA & ANALYTICS About the Research A global survey of more than 400 asset managers and institutional asset owners on investment data and analytics, conducted by the Economist Intelligence Unit on behalf of State Street (August and September 2013). The survey included 74 traditional asset managers (focused on equities or fixed income strategies). Respondents by Region Respondents by Type 8% 20% 33% 8% 34% 16% 18% 33% North America Europe Asia Pacific 19% 11%  Diversified Asset Managers  Traditional Asset Managers  Alternative Asset Managers Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit  Banks  Insurers  Pension Funds  Other 2
  • 3. DATA & ANALYTICS Disruptive Industry Trends Require a Rethink of Data Strategies Asset managers are redesigning their operating models and data infrastructures in response to five forces of change Strategic impact Data challenge New standards on risk Investors and regulators demand greater transparency Integrated data analytics across more complex portfolios Outcome-based investing Benchmarks will be more personalized around investor goals Custom benchmarks require new data and tools to measure performance Regulatory complexity Increased reporting requirements in multiple jurisdictions Flexible reporting platforms; compliance rules integrated into operational systems Electronification of trading Decision-makers in front office need to be able to act faster on investment insights Need for real-time data as well as better order management and portfolio optimization tools Support for new markets Need broader insights to select investments and ways to service local needs Systems that can adapt to meet local market demands, while retaining benefits of scale 3
  • 4. DATA & ANALYTICS The Industry is Investing Heavily to Keep Pace % Change In Investment into Data and Analytics Over Past Three Years (Traditional asset manager respondents only) Significantly increased our investment (>20%) 11% Slightly increased our investment (1-20%) 77% Made no change 12% Slightly decreased our investment (1-20%) 0% Significantly decreased our investment (>20%) 0% Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 4
  • 5. DATA & ANALYTICS Investment is Targeted at Decision-Making in the Front Office How Investment Will Be Prioritized Across a Range of Data Tools (Traditional asset manager respondents only) Portfolio optimization • Decision-support for the front office becomes a priority • Need to move closer to realtime information 26% Order Management Systems / Execution Management Systems 42% Benchmark data 39% 32% Performance analytics 22% Risk analytics 22% Significant increase Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 57% 41% 47% 35% Slight increase 5
  • 6. DATA & ANALYTICS Data and Analytics are Now a Firm Priority for Institutional Investors … Data is the Key to Addressing a Wide Range of Strategic Concerns (Traditional asset manager respondents only) 7% • More than 9 out of 10 (93 percent) institutional investors view data and analytics as a high strategic priority • For 35 percent, data and analytics is the most important strategic priority 35% 0% 58% 0% It is the most important strategic priority It is a high strategic priority (near the top) It is a mid-level strategic priority It is a low-level strategic priority (near the bottom) It is not a strategic priority Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 6
  • 7. DATA & ANALYTICS Yet the Industry is Polarized by Its Approach Data is a competitive asset … But few know how to use it • 66 percent of traditional asset managers believe data will be a key source of competitive advantage in the future • Only 23 percent of asset managers are reaping the full benefits from their data and analytics capabilities today • 88 percent increased investment in data infrastructure in the past three years • Our research reveals that a capability gap is opening up between data leaders and data laggards An Industry Divided by Data 1. “Data Leaders” – Companies in the survey whose data and analytics are already a source of competitive advantage 2. “Data Laggards” – Have yet to gain full benefit from their data Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 7
  • 8. DATA & ANALYTICS Data Leaders are Better Prepared for the Challenges Ahead Leaders Data leaders are more confident in ... Laggards % confident in capability (All respondents) 70% • Generating forward-looking insights from data 43% 72% • Integrating risk and performance analytics 50% • Optimizing their electronic trading strategies 64% 53% By contrast, data laggards are … • More likely to get distracted by the complexity of data management X % agree with statement (All respondents) 7% 33% • Less likely to feel their data capabilities are keeping pace with the growth of their business Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 92% 50% 8
  • 9. DATA & ANALYTICS Data Leaders Have Smarter Tools for Managing Risk, Compliance and Performance % that view area as a strength (All respondents) Leader 81% Tools for regulatory compliance Laggard 63% Leader 60% Multi-asset class risk tools Laggard 38% Leader 70% Custom benchmarks/indices Laggard Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 59% 9
  • 10. DATA & ANALYTICS Defining a New Service Model Data Readily Available Adaptable Systems Smarter Insights Challenge • Accuracy of information is the top data challenge for traditional asset managers (cited by 43 percent) • Systems must adapt to support multiple geographies, asset classes and regulatory regimes • Only 18 percent of traditional asset managers have all of the talent they need to manage data effectively Solution • Trusted data providers • Systems that support global reporting • New outsourcing models focused on insight as well as cost • Integrate data to achieve “one version of the truth” • Integrated view on risk and performance 10
  • 11. DATA & ANALYTICS In Summary: New toolkit for asset managers Better risk and performance analytics • Asset managers moving into more customized solutions will need risk and analytics tools with multi-asset class capabilities Manage Regulation • Develop reporting systems with the flexibility to meet evolving regulatory demands across multiple jurisdictions Integrate Your Data • Traditional asset management firms need to invest in enterprise data warehouses and better data governance Accelerate Investment Decisions • Better, more accurate and timely data is key to making better investment decisions and being able to act on these insights in real time Future-Proof Your Systems • Traditional asset managers need flexible systems that can adapt as investment goals and strategies evolve 11
  • 12. DATA & ANALYTICS This document is for marketing and/or informational purposes only, it does not take into account any investor's particular investment objectives, strategies or tax and legal status, nor does it purport to be comprehensive or intended to replace the exercise of a clients own careful independent review regarding any corresponding investment decision or review of our products and services prior to making any decision regarding their utilization. This does not constitute investment, legal, or tax advice and is not a solicitation to for products or services or intended to constitute any binding contractual arrangement or commitment by State Street and/or any subsidiary referenced herein to provide securities services. State Street hereby disclaims all liability, whether arising in contract, tort or otherwise, for any losses, liabilities, damages, expenses or costs arising, either direct or consequential, from or in connection with the use of this document and/or the information herein. This document contains certain statements that may be deemed forward-looking statements, which are based on certain assumptions and analyses made in light of experience and perception of historical trends, current conditions, expected future developments and other factors believed appropriate in the circumstances. © 2014 State Street Corporation CORP-0934 12