The Value Of Data For Asset Managers

Data and analytics is no longer a new arrow in a company's digital quiver—but how can strengthening technologies in D&A help asset managers in particular? Often, big data sets are too cumbersome to look through using standard queries: if the nature of the data is unknown, it's difficult to apply any mathematical technique to extract its value. This brings us to the science of D&A, which is extremely important in this age of big data. D&A can be done on big data sets to successfully extract hidden value, informing decision-makers and helping drive business models.

An asset to asset managers

Fund management companies, like everyone, have loads of data. In order to extract the maximum value from this data, they must also have honed solutions for visualising and understanding:

trends in their funds' (clients') subscriptions and redemptions the impact of flows on fund performance the impact of subscriptions and redemptions on liquidity, and hence on the returns of the portfolio how their fees compare to those charged for similar products on the market, and whether the fees are "market accepted" (i.e. by seeing what kind of fee structures are rewarded and accepted by investors for a given return-per-unit risk) how investor sentiment regarding new flows breaks down by asset class across different economic conditions in reaction to big news events whether investors follow funds that are going to generate good or positive returns in future, or if the flows are the reason for the higher returns Fund management companies constantly need to develop new and better products for their clients—this has become the status quo in a hypercompetitive sector. The focus of my team and me is to help these companies provide tools to their clients that are built around the ideas listed above. As a result, I've been able to compile some observations about how asset managers can use such qualitative feedback. Read on for some area-specific insights.

Subscriptions and redemptions

The goal ought to be to understand the general trend shown by investors subscribing to or redeeming a fund. Knowing triggering events, seasonality, and other decision-making criteria by investors can be tremendously helpful in analysing the impact on the future flows to the fund.

Impact of flows on the performance of the fund

Significant inflows or outflows can cause funds to underperform in cases where...