Northern Trust Survey: 98% of Managers Seek to Incorporate Data Science to Optimize Investment Performance
Investment managers pressured by rising costs, increased transparency demands and the need to generate consistent performance are looking to harness the full potential of data in order to compete and position their firms for the future, according to a survey of 300 global asset management firms sponsored by Northern Trust.
Northern Trust today issued a white paper, The Art of Alpha: It’s All About Investment Data Science, that offers insights into how asset managers can improve investment outcomes with data strategies that better leverage technology, applying data science and behavioural analytics to processes that have historically resided on spreadsheets or other documents.
“This survey shows asset managers are aware of the need to implement a digital operating model that enables efficient and safe growth, but at the same time are rightly focused on the imperative to spend scarce capital wisely,” said Paul Fahey, head of Investment Data Science (IDS) at Northern Trust. “As evidence grows around the value of investment data science, asset managers are looking to their data to help them drive high quality outcomes so they can invest more effectively in their core activities.”
The survey, conducted for Northern Trust by WBR Insights, shows asset managers recognize the value of centralized data platforms for decision making:
However, while
This incongruence was evident in other responses. Nearly half have a system to measure decision-making and inputs, but only
The survey data presents a view of current data science capabilities and the ambitions of global asset managers in the next two years, as well as some of their key strategic priorities:
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66% of respondents said they currently leverage five to eight sources of investment data, with ESG data (59% ) and traditional factor data (55% ) prioritized but alternative, consumer and sentiment increasingly used in the search for new sources of alpha.
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52% said their organizations are still using spreadsheets to aggregate internal and fundamental data; other data sources are accessed manually (email, PDF, etc.) and integrated to make investment decisions.
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52% of respondents said “making their best investment ideas repeatable” was the investment process that could most benefit from data analytics.
“There is growing evidence that incorporating investment data science helps managers better meet their obligations to regulators, owners and investors,” says Gary Paulin, head of Global Strategic Solutions at Northern Trust. “Asset managers need to become more digitally conversant, not only because it will lead to improved investment outcomes, but because it’s being demanded more by their stakeholders, who are leveraging data science tools to do analysis of their own.”
Conducted in the second quarter of 2021, the survey captures responses from CEOs, Chief Investment Officers, Chief Data Information Officers and other executives of asset management firms with AuM of between US
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 22 U.S. states and Washington, D.C., and across 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2021, Northern Trust had assets under custody/administration of US
Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Please read our global and regulatory information.
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