A Close-up on Canada: Data, Investment Performance, Technology and Operational Strategy in Focus

Manuel Tereso, CFA, Consulting Lead, & Mark Goodey, Dip IoD, Director

The investment management landscape in Canada continues to change rapidly. Mounting regulation, technological advancement, changing client demands, business transformation initiatives, and consolidation are presenting asset managers with both new opportunities and new risks. This prevailing shift in the industry was felt at two recent events in the region – TSAM Toronto and a client event that Eagle hosted jointly with CIBC Mellon. The events shared common, prominent themes in the industry that arose amongst the operations teams of Canadian asset managers and asset owners.

Mastering Strategic Data Quality
Firms are focusing on creating robust governance frameworks and enhancing the strategic management of their data, evidenced by the growth of the Chief Data Officer role. At TSAM Toronto, a show of hands was asked for those who did not have a data office within their organisation, highlighting that a tipping point has clearly been reached. Previously, the assumption of embarking on a new technology project was that data issues would resolve themselves or would be someone else’s problem to address further down the line. Yet today, many enterprise level projects and initiatives now start with better alignment to data as a primary governing thought. Firms are investing significant amounts of time, money, and energy in ensuring the quality of their data. Judging from the topics and interest from the TSAM Toronto delegates, it is evident data management will continue to be a growing priority.

Operational Strategy
Teams are growing, but are they focusing on maintaining status quo or pursuing new strategies? If the mundane – though critically important – routine tasks can be automated through robotic process automation (RPA), adding additional capacity without increasing headcount, why wouldn’t firms pursue leveraging this technology? RPA can free up the time of existing staff to learn how new products, news instruments, and differentiated strategies can be better supported. We’ve encountered many instances where operations teams have helped support marketing and investment strategies. While computers thrive on mere process, humans conversely tend to enjoy a strategic challenge.

At both our client event and TSAM Toronto, the subject of “smart-sourcing”  frequently emerged. Firms are increasingly looking to marshal their resources as efficiently as possible by retaining some activities and functions in-house, while automating and outsourcing other sets of tasks entirely according to their business needs. Across CIBC Mellon, BNY Mellon, and Eagle Investment Systems, we offer a continuum of sourcing options to provide clients with the flexibility to choose the blend that’s right for them.

GIPS® 2020
Along with expecting the final release of the GIPS® 2020 standards at the end of June 2019, we are expecting “carve-outs” will find their way into the standards. The “Exposure Draft” published last year clearly encourages asset managers and asset owners to adopt this ethical best practice. This element alone will require firms to update their processes, along with their policies and procedures.

Some concerns have been expressed about the additional burden this change will place on operationally-focused performance teams – generally firms that rely on humans for their ‘build’ approach instead of leveraging technology. Those in the fortunate position to leverage third party vendors can expect an easier path. For example, at Eagle we add additional product features, such as automated-triggers and controls, to make life easier for our clients. This strategy also serves to help demonstrate rigor and robustness for both internal and external audit. At a time where cost pressures are unwelcome, a rules-based approach can do the heavy-lifting that requires more headcount and increasing costs.

As our colleague Marc Rubenfeld recently highlighted, in his blog ‘Becoming a Data-Driven Organisation’, data continues to be a universal theme – and is certainly true for Canadian asset managers and owners.

Data management is the foundation on which Eagle is built, so we are uniquely adapted to leverage cloud technology and process data at an extraordinary speed. For example, we can demonstrate fixed income attribution across a date range and generate automated investment commentary using natural language generation in a matter of seconds. Our open architecture and third party Strategic Alliance program approach enables us to focus on our strengths and leverage the very best tools and solutions of others. This gives the client the best choice of outcomes to suit their business needs and better control their data and workflows. No single technology can meet the needs of a modern investment manager; rather a solid data foundation with consistently reliable data that has been validated and enriched, with the flexibility to incorporate new functionalities and workflows, is key.

ESG and Beyond
Unsurprisingly, ESG was as dominant a topic in Toronto as it is across much of the globe. Insightful speakers represented both the industry and the United Nations’ Principles of Responsible Investment (UNPRI) and Responsible Investment Association, with measurement as a key discussion point. Eagle and BNY Mellon have ingested, via Arabesque, the United Nations Global Compact scores and the Arabesque ESG scores and can demonstrate investment commentary for attribution and ex-post performance statistics alongside ESG factors.

As our meetings in Canada served to highlight, the investment management landscape is evolving almost as quickly as the technology that serves it. The potential of this is thrilling, with possibilities that are as boundless as the imagination. If you’d like to discuss how Eagle can help your firm take advantage, don’t hesitate to get in touch with us.

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