Posts by: Teague Duncan

Why Forward-Thinking Companies are Focusing on Data and Agility

Technological innovation is having a transformational effect on the economy, with businesses in every sector realising the importance of quality data and being agile to respond quickly to changes. The disruptive power of technology on incumbent businesses and business models varies across industries, with consumer firms hit first and, so far, hit hardest. However, this fourth industrial revolution is still in its infancy and promises to deliver even more profound shifts in ways that can’t yet be seen in the coming years.

Marc Rubenfeld, Head of Sales for EMEA

Technological disruption was initially slow to impact the financial services industry, particularly when compared with the likes of the retail sector. It’s now clear, with much discussion around blockchainbig datamachine learning and artificial intelligence, that there are many opportunities to disrupt financial services.

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ENGAGE18: The Momentum Behind Eagle’s Alliance Program

Joel Kornblum, after speaking at the ENGAGE18 client conference, highlights how the strategic alliance program extends upon Eagle’s core offering

Joel KornblumGlobal Head of Strategic Alliances & Consultant Relations

As part of his keynote address at ENGAGE18, Eagle’s CEO, Mal Cullen, touched upon the many benefits of Eagle’s platform strategy. One of the biggest advantages for clients is that while Eagle’s focus remains true to its core offerings of data management, investment accounting and performance measurement, our open ecosystem allows us to offer best-in-class solutions that extend far beyond our core capabilities.

In line with the philosophy of collaboration inherent to our platform model, Eagle has put considerable effort into building out our strategic alliance program, which now counts over 20 firms whose solutions and technology are readily available to Eagle clients.

In many ways, the goal of the program is not unlike the Star Alliance that frequent travelers are quite familiar with. Just as the Star Alliance facilitates a smooth transition for travelers navigating across geographies, Eagle’s alliance program was conceived to simplify the integration of third-party technologies and create joint solutions.

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Investment Performance on the Move: Five Steps to Manage Migration Complexity

As the performance measurement function grows in complexity, organizations are migrating to new platforms that can provide the requisite agility. Eagle’s Ian Patient highlights the new demands facing performance teams, while identifying five key principles that can simplify a new system implementation.

Ian Patient, Principal Consultant

It’s generally understood that the investment landscape has become exponentially more complex. At the front lines absorbing the increased complexity is the performance measurement and attribution team, a function that itself has undergone significant change in recent years.

From an operational perspective, the performance function is facing multiple challenges. The financial instruments, themselves, have become more complex and as active managers fight both the low-rate environment and the rotation into passive products, demands for reports and dashboards with more details and analytical capabilities have increased considerably. Another threat is that the existing function, as it endures in most organizations, tends to be fragmented, with a model that leaves team members overstretched and internal and external stakeholders unfulfilled.

Making matters more difficult, performance teams are left trying to solve for these issues on legacy systems that either can’t accommodate the required functionality or don’t have the data foundation in place to deliver information as needed and across digital mediums. And without certain capabilities today – ranging from exception-based workflows to true “look-through” transparency – it can be impossible to adequately meet the needs of a modern investment organization.

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ENGAGE18: Managed Services and the Evolving Operating Model

Liz Blake, presenting at Eagle’s ENGAGE18 client conference, discusses the impact managed services can have on an organization’s culture

Liz Blake, Global Head of Eagle Managed ServicesSM

According to a recent Experian white paper, “Building a Business Case for Data Quality,” 83% of organizations have seen bad data stand in the way of reaching key business objectives. In particular, the research identified lost sales opportunities, inefficient processes, and client relationships as among the more prominent areas affected, but also underscored that the internal impact can extend all the way to the culture of the organization.

Nearly everyone today recognizes the challenges created by the exponential growth in the volume, velocity and variety of data. How asset managers deal with this information glut, however, can dictate whether it presents an opportunity or a threat.

As part of my presentation at ENGAGE18, I discussed what it takes to become a true data visionary, one that is willing to rethink their data function altogether to leverage the right technology and services to instill newfound agility and ensure data is working for the business, not against it. This is in stark contrast to an “incrementalist” mentality in which asset managers simply tack new capabilities onto legacy systems and fight an ongoing struggle to keep pace with mounting internal and external demands.

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ENGAGE18 Q&A: Enterprise Data Management – A Cornerstone to Transformation

Is your data working for you or is it the other way around? A Q&A with Eagle’s Paul McInnis ahead of his panel at ENGAGE18 can help answer that question

Q: As it relates to data management, what are the biggest obstacles that stand in the way of whether data is working for or against the larger organization?

A: First and foremost, the biggest obstacle for many asset managers today are their legacy systems. That’s why we’re seeing so many organizations embarking on transformation initiatives that begin the journey by addressing the technology debt accumulated over the past 15 or 20 years. As old technology gets shuttled out, the adoption of agile and scalable systems allows organizations to store and process more data than ever before. And these efforts enable firms to not only leverage their data today but also positions them to seamlessly build out their capabilities in the future.

As digital information expands, the amount of data is increasing at a significant pace each year. Older systems simply can’t handle the volume or velocity of information. This glut, beyond exposing inadequate systems and degrading data quality, has also driven an emphasis on enterprise data management—it’s no longer just data management. Ten years ago, the amount and types of data being utilized was managed in different silos; today, that’s almost certainly a disaster waiting to happen and the impact is felt across the business.

Q: So as the philosophy of CIOs evolve, how has this changed how organizations manage data?

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ENGAGE18 Q&A: How Technology is Fueling the ESG Revolution

Arabesque’s Andreas Feiner, Head of ESG Research and Advisory, discusses the drivers behind investors’ growing appreciation for sustainability.

Q: In terms of an introduction, can you talk a bit about Arabesque and, in particular, the firm’s thesis around sustainability?

A: Arabesque was founded on the mission to help mainstream sustainable investment strategies. Since our management buyout from Barclays five years ago, we’ve tried to become a conduit and vehicle for asset managers of all stripes to incorporate sustainability into their processes. And we’ve found that across the broader asset management industry, the level of interest has only grown as the market understands that ESG (environmental, social and governance) is in fact “performance relevant.”

There is still this notion, though, that sustainability is about the goods or products being produced or sold. This misconception goes back to the SRI (socially responsible investing) filters that have been around for a long time and were generally used to help people avoid investments in certain “sin” industries, such as alcohol or tobacco. Adding to the confusion recently has been the growth of the impact investing space, which is more aligned to meeting philanthropic objectives and typically isn’t additive to performance. ESG, though, should be viewed as a way for investors to gain a more complete picture around a company’s opportunities and potential risks, and serves to reinforce and improve returns.

Sustainability, as we think about it today, is about three things: environmental stewardship, social inclusion and sound governance. Each of these factors supports economic value creation, collectively, and serve as a foundation for transparent and principled markets. So, as investors begin to look at these areas more closely—to reduce risk and improve stock selection—we can begin to quantify how these factors improve performance. In fact, to put a number on it, our data shows that by incorporating ESG analysis into the investment process, it can add between 50 and 100 basis points per annum to returns and imparts a slight reduction in the overall risk. In a low-rate environment, this is not immaterial to total returns and it more than offsets any additional fees required to incorporate these kinds of ESG capabilities into an investment strategy.

Q: There has certainly been a budding interest in ESG strategies judging by the media coverage. But where would you say the movement currently stands with the investment community and what are the catalysts that will drive it forward?

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ENGAGE18 Q&A: Brian Dunton on Streamlining Derivatives Operations

Eagle’s Head of Instrument Engineering, Brian Dunton, gives a preview of his presentation at ENGAGE18. The discussion will focus on the significant uptick in derivatives volumes among Eagle’s client base and how Eagle’s 2017 release adds features designed to support additional asset classes and improve client workflows.

Q: The use of derivatives by asset managers has been increasing steadily over recent years. You have year-to-date statistics showing that notional values of interest rate swaps and credit default swaps have increased by 40% and 69% respectively. Trade counts have also increased dramatically. What’s driving this? 

A: There are a number of factors driving the increased use of derivatives, but one of the largest is the historically low interest rate environment. This gives investors the opportunity to gain large market exposure at a low financing cost without using up their cash reserves.

Another factor is the large degree of standardization, through OTC clearing, that makes derivatives easier to trade and reduces counterparty risk. As a result, investors have become more familiar with these securities and incorporate them more readily into their portfolios. In an increasingly competitive market, investors are turning to derivatives as a way to drive alpha and beat the benchmarks.

Political and economic uncertainty—both at a national and global level—is also playing a role as investors look to hedge risk. Whether it’s the prospect of a trade war or the volatility we saw in the stock markets in February, which was exacerbated by margin investing, investors are anxious to mitigate these risks.

Q: What challenges does this present for asset managers?

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Meet…Mark Goodey

Eagle Investment Systems’ new Senior Principal of Investment Analytics, Mark Goodey discusses his role, the challenges facing risk and performance professionals on the buy-side and the impact new and emerging technologies are having on the industry.

Q: Mark, you spent over 20 years at buy-side firms including JP Morgan Asset Management, Aviva Investors and F&C Asset Management specialising in market risk and investment performance. What are the main challenges performance professionals run up against? 

A: For the last 40 years the math of performance has been roughly the same. The models themselves haven’t really changed and the importance of data management has been consistent. Today, though the industry has become more complicated and the tools at our disposal have improved, we still spend the majority of our time managing data. As a result, I don’t know of many performance teams on the custody- or buy-side that have shrunk, they just keep getting bigger to cope with the increased data demands. 

Q: How do you think new and emerging technologies like AI and robotics will shake up risk and performance measurement?

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ENGAGE18 Q&A: Rob Hegarty on how asset managers can reap the benefits of technological disruption

Rob Hegarty, managing partner and founder of financial markets, technology and data consultancy, Hegarty Group, and panel moderator at ENGAGE18, shares his views on the technology trends shaping the asset management industry.

Q: What do you see as the most important technology trends shaping the asset management industry? 

A: We are currently in a very interesting time for the asset management industry. There’s never been a time more full of change, challenge and promise than where we are today and this is largely due to the evolution of technological change.

The industry is at a tipping point, driven by the confluence of two key factors: the proliferation of data and rapid advances in technology. The proliferation of data includes everything from structured data to unstructured data to the availability of alternative data. In terms of technology, the biggest shift we’re seeing there is around artificial intelligence (AI) and machine learning (ML). The industry has already started to latch onto that evolution with the widespread adoption of robotic process automation (RPA)—an early form of AI—over the last few years, but we’re still in the early innings of the explosion in the use of these technologies.

Together, the proliferation of data combined with the advances in AI and ML is dramatically changing the investment landscape.

Q: And what emerging technologies do you think will have the biggest impact on the industry in the short-term and the longer-term?

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InvestOps Recap: The Misconception Around Global Operating Models

Eagle’s Liz Blake, speaking on a panel at the InvestOps conference, highlights why all asset managers should be thinking about a global operating model regardless of where their business resides

Liz Blake, Global Head of Eagle Managed ServicesSM

As part of a panel at the recent InvestOps USA Conference the moderator opened the discussion asking how buy-side firms are navigating globalization’s many obstacles. While added regulatory demands and competitive pressures have certainly made these challenges more acute, the opportunities available through adopting a global operating model should not be overshadowed. In fact, even for domestic firms—who may harbor no designs to open overseas locations—the ability to extend the business day through “follow the sun” (FTS) workflows is becoming a necessity to accommodate the new and pressing demands being placed on operations teams.

This was a theme I discussed at the conference, which also featured panelists in senior operating roles at Invesco, Manulife Asset Management, and Putnam Investments. The larger point is that given the complexities and challenges that face asset managers of all sizes today, not having a team in place working around the clock to instill a true data foundation can create a competitive disadvantage in the form of back-office bottlenecks and the erosion of trust across the enterprise. If portfolio managers don’t have conviction in the data or if accounting and reporting teams spend their days trying to resolve data errors, the impact will extend far beyond lost efficiencies.

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