In case you missed our most recent event, The Impact of New Technologies on Alpha, here are some highlights from the panel discussion.
2016 was a challenging year for asset managers, especially up until Election Day. With the commoditization of information, managers have lost their competitive edge and are now looking for new ways to create alpha.
Data and information have to be looked at differently. Now, more than ever, greater emphasis has been placed on gaining unique access to data -- with the best source of unique data being your company’s own information on its clients’ and partners’ activities. In order to make your unique data actually useful, it is pertinent that you first organize and clean your data before analyzing it.
Some funds have already heavily invested in building and buying new technologies to gather and analyze their data despite the inconclusive results. Many of these funds are actively looking into automation strategies and layered approaches to create operational and cost efficiencies for their firms.
While big data and other emerging technologies yield great promises, they call into question security, privacy, and ethical issues (i.e. Where is the data coming from?) Controls must be placed around these issues, which if left unaddressed may become major hurdles to the long-term benefits of these technologies.
Gravitas polled the panel audience and determined that only 12% of attending fund managers already actively deploy big data and AI in their investment decisions.
“There seems to be a frontier mentality in 2017 around structured and unstructured data and the use of AI to create new insights. My prediction is that in the next three years, 90% of asset managers will be using these emerging technologies directly or indirectly," said Jayesh Punater, Founder & CEO of Gravitas. “Funds will have to learn to leverage data by augmenting it with machine learning to remain competitive,” added Punater.
As a service provider to the asset management industry for over two decades, Gravitas' business model has transformed from being a technology firm to a middle office outsourcing firm. "Gravitas is now actively looking at how we can integrate these new trends around big data and AI into our offerings -- and bring even smarter solutions to our clients, enabling them to compete more effectively in finding alpha,” said Punater.