Embracing Analytics: What Asset Management Firms Can Learn from Major League Baseball

Baseball has demonstrated the profound impact of analytics. Although it is a major sport in the United States, the lessons learned from its data transformation have global application. As asset managers are similarly navigating data transformation in their own industry, they are looking to close the data and technological gap – and discovering Managed Services as a solution that can help them rapidly and effectively make the shift.

Liz Blake, Global Head of Eagle Managed ServicesSM

When Michael Lewis first published Moneyball, he documented how one baseball team embraced data. Fifteen years later, this data-first mindset has spread across the league, impacting how teams invest in free agents, how the game is managed, and even how they sell tickets.

For asset managers, this is more than a curiosity. Baseball’s data transformation foreshadows the change currently reshaping the investment business. Just as advanced analytics challenged long-held assumptions and, ultimately, rewrote convention in baseball, asset management now is undergoing a similar transformation.

Model for Asset Management Firms
Incorporating a true evidenced-based, data-centric mindset into baseball’s scouting and player selection required new thinking or risking being left behind. Today, investment managers are confronting similar challenges. They’re not only rethinking what they analyze and how they generate alpha; they’re reimagining their entire operating model to treat data as a true asset. This enables them to redeploy resources – both people and capital – in new and more effective ways.

Historically, baseball managers were relegated to manual tabulations of individual data points, stored on paper and in their memories to drive decision-making. For example, great managers may know that a batter was a good hitter and was likely to get on base.  However, in order to win more baseball games, teams needed analytics to know how he got on base (he hit a curveball to shallow right field). Using this information in context, managers were able to hone game strategies, like the “shift,” in order to get the batter out, and put their team in a better position to win games. Ineffective use of resources – such as bringing in a curveball pitcher to throw to a batter who loves hitting curveballs or leaving the third baseman and shortstop in their traditional positions waiting for a ball that is rarely going to come – are not winning strategies.

Adopting an Analytical Mindset
Analytics in asset management isn’t just about improving portfolio management. Organizations at the front of the change curve are already using analytics to augment client relationships, optimize internal processes and resources, exploit new market opportunities, and roll out non-traditional products, such as complex derivative securities or alternative products with more pronounced data needs.

To achieve this vision, the focus of the data function itself must change inside asset management firms. With the amount of energy expended to get data ready, data resources don’t have the bandwidth to focus on analytics that can provide a material, competitive advantage to drive new revenue and to build enhanced client communication.

Managed Services offers options to help investment firms make the transition from manufacturing data to utilizing it to drive intelligent business decisions. Eagle Managed ServicesSM, for instance, can handle everything from data import and integration, golden copy and security masters to data enrichment, validation, exceptions and quality checks. The global team of experts provide efficiency using sophisticated data management technology and automation tools. Eagle Managed Services clients, in turn, benefit from a data service tailored to their current needs and future growth strategy that is optimized against internal strengths or weaknesses – all while retaining control of their data.

Asset management firms must adapt to stay relevant, and in taking these steps, the internal data function will tilt from production to analysis. In-house resources will dedicate more time to interpreting the data and contextualizing it to help achieve the organization’s most ambitious objectives. Internally, data officers and analysts will become empowered to identify market opportunities, impart operational efficiencies, strengthen the sales process, and surprise and delight clients with deeper, more effective analysis. They will also leverage technology and automation in new and exciting ways. Together, this will help the broader organization keep pace with a rapidly changing market and stay ahead of competitors.

And like successful baseball teams, your stakeholders will be excited about your results.

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