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

1. DATA & ANALYTICS
Chasing Alpha:
Data and Analytics for Alternative 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). Of the participants, 81 were alternative asset managers.
Respondents by Region
Respondents by Type
20%
33%
8%
8%
34%
16%
18%
33%
North America
Europe
Asia Pacific
11%
 Diversified Asset Managers
 Traditional Asset Managers
 Alternative Asset Managers
Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit
19%
 Banks
 Insurers
 Pension Funds
 Other
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3. DATA & ANALYTICS
Five Drivers of Change in the Alternative Asset Management Industry
Advanced data capabilities will be key to meeting many of the industry’s
most pressing challenges
Strategic impact
Data challenge
The search for alpha
Institutional investors will seek out
managers that deliver exceptional
performance
Investors demand
more transparency
Managers need to provide more
reliable information to investors across
investment cycle
Data systems must enable managers to
extract investable insights from data and
achieve performance attribution at a
granular level
Managers that can report on performance
and risk data in a way that is tailored to the
client’s needs will have a competitive edge
New emphasis on risk
management
Managers need to demonstrate strong
risk credentials to investors
Need for risk data on broader set of assets,
combined with more sophisticated analytics
Real-time focus
More data to be accessed and
analyzed in real time; hedge funds
seek to achieve zero latency
Increased focus on trading solutions that
support real-time decision-making, as well
as the ability to capitalize on trading
opportunities
Regulatory complexity
Greatly increased reporting
requirements from domestic and
international regulators
Flexible platforms that enable data to be
collected, transformed and reported across
multiple regulatory regimes and formats
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4. DATA & ANALYTICS
Alternative Asset Managers are Investing Heavily to Keep Pace
% Change In Investment into Data and Analytics Over Past Three Years
(Alternative asset manager respondents only)
Significantly increased our investment (>20%)
14%
Slightly increased our investment (1-20%)
80%
Made no change
6%
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
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5. DATA & ANALYTICS
Investment is Targeted at Front-Office Execution and Decision-Making Tools
How Investment Will Be Prioritized Across a Range of Data Tools
(Alternative asset manager respondents only)
Order Management Systems /
Execution Management Systems
• Front-office tools are an
investment priority
Portfolio optimization
51%
22%
• Spend on data and analytics
will continue to grow
Performance analytics
• Need to move closer to realtime information
Benchmark data
25%
Risk analytics
25%
32%
Significant increase
Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit
38%
59%
40%
46%
42%
Slight increase
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6. DATA & ANALYTICS
Data and Analytics are Now a Firm Priority for Alternative Asset Managers…
Data is the Key to Addressing a Wide Range of Strategic Concerns
(Alternative asset manager respondents only)
4%
• 96 percent of alternative asset
managers view data and analytics as
either a high or the most important
strategic priority
47%
49%
0%
0%
• For 47 percent, data and analytics is
the most important strategic priority
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
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7. DATA & ANALYTICS
Yet the Industry is Polarized by Its Approach
Data is a competitive asset …
But few know how to use it
• 71 percent of alternative asset managers
think data will be a key source of
competitive advantage in the future
• Only 31 percent of alternative asset
managers are reaping the full benefits from
their data and analytics capabilities today
• 94 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
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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%
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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%
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10. DATA & ANALYTICS
Defining a New Service Model
Data Readily Available
Adaptable Systems
Smarter Insights
Challenge
• Data integration (cited by
38 percent) and accuracy
of information (cited by 37
percent) are the top data
challenges for alternative
asset managers
• Systems must adapt to
support multiple
geographies, asset
classes and regulatory
regimes
• Only 17 percent of
alternative 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
Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit
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11. DATA & ANALYTICS
In Summary: Outperforming the pack
Integrate your Data
• Alternative asset management firms need to invest in enterprise data
warehouses and better data governance
Manage Regulation
• Develop reporting systems with the flexibility to meet evolving
regulatory demands across multiple jurisdictions
Improve Performance
Analytics
• Provide investors with more transparency into the basis for their
performance
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
• Alternative asset managers need flexible systems that can adapt as
investment goals and strategies evolve
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12. DATA & ANALYTICS
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