Data Standardization Has Become Crucial to the Alternative Investments Industry
Highlights from a session with leading asset managers on the importance of data in alternative investment decision-making.
12 August 2021
SS&C Intralinks’ 2021 Alternative Investments Summit Series for North America — one in our series of regional summits — presented a session on data standardization.
Today, big data is ubiquitous. Access to key market data and metrics is easier than any time in global economic history, and its proper analysis and deployment can bridge the gap between risk and reward.
SS&C Intralinks’ VP of Product Management Noreen Crowe moderated the virtual session with three expert panelists from across the alternatives category: Bruce Richards, chairman, chief executive officer at Marathon Asset Management; David Muhlenkamp, head of portfolio operations at Lindsay Goldberg; and Manek Kapur, technology private equity, member of management at Partners Group.
Here are six key takeaways from the session:
1. Good data equals good decision-making.
The panel agreed that big data — and digital analysis — is a foundation of modern-day investing. Analytics tools allow investors to cull useful information. Machine learning and data visualization allow for more accurate comparisons of consumer behavior and market metrics. Data helps inform investors from the best risk/reward for deploying capital to how to structure a credit investment.
2. Data adds value — and visibility.
Panelists talked about how fund managers can add value to a position. One panelist spoke of how, when acquiring a company, they try to partner with the founder (or family) to learn about their experiences. Then they use data to build on that experience and add value. Visibility through data also helps monitor, track and understand the performance of an investment as well as facilitate transparency among managers. That greater visibility into where true margins are being generated — or where sustainable growth is coming from — can then make management teams better stewards of capital.
3. Data requires the right tools.
After data is collected and analyzed, it’s important to be able to visualize it and take action on it. Building a customized, uniform strategy to clean that data and create a simple user interface (UI) makes a savvier, data-driven team.
4. The pandemic affected how we approach data.
Our adapting of global commerce to the COVID-19 crisis created a stress test concerning our need for accurate data. It emphasized our reliance on customer behavior, market data and investment performance. To achieve the brand of standardization that works for an organization takes a bespoke solution — a network of trusted service providers who can parachute in and help at the right time and build data capabilities within the organization.
5. Standardization? Or customization?
The panelists agreed that data standardization makes sense across an asset class. However, there’s something to be said for customized data solutions: There are standard metrics you may want to know about every business or see how a portfolio company performs against its peers. Knowing what’s important to each business can help keep managers enthusiastic about adding value.
6. ESG is ubiquitous
Lastly, the panel also stressed the importance of environmental, social and corporate governance (ESG), not just with respect to data but as a factor in investment decisions.
Data is constantly changing. Analytics is still at a young stage; AI (artificial intelligence) and machine learning even younger. But in the end, data helps us make informed decisions: when to hold and when to sell. The accumulation of data Is only as good as your models. That leads to better decisions — and better returns.
Our thanks to the panelists for sharing their views on this important topic for the alternatives industry. You can view the discussion on-demand here.