North American fund managers are placing a growing emphasis on both the quality of the data used in their investment processes and having access to the technological capabilities to efficiently process data.
Six out of 10 believe this is crucial to achieving above-average returns in the future.
This is according to the recently published study of the quant technologies provider SigTech, which surveyed fund managers in North America who collectively manage around $600billion.
As indicated by the results, 94 per cent of fund managers find the process of evaluating data, ensuring it meets quality standards and negotiating with data vendors challenging. Seventy-two per cent say it is difficult to source data that is cleaned, validated and ready to use from vendors.
When it comes to onboarding new data sets, nearly six out of ten reportedly encounter problems, with 56 per cent saying it takes between one and six months to have new data fully operational internally.
As a result of the many challenges faced when sourcing and managing data, 64 per cent expect to increase their budget in this area over the next few years.
When asked to pick the two asset classes where they encounter the greatest difficulty in accessing high-quality data, 62 per cent cited fixed income, followed by 54 per cent who cited commodities. In terms of the two financial instruments where they have the greatest difficulty in securing high-quality data, 66 per cent cited forwards, followed by cash/spot at 58 per cent and then futures at 40 per cent.
In terms of outsourcing of data services, the study found that 64 per cent of fund managers have increased their level of outsourcing over the last two years. Going forward, 77 per cent plan to outsource more between now and 2024, with none seeing a decrease.
When asked which factors are fuelling the growing trend towards data services outsourcing, a shortage of qualified in-house subject matter experts and resources was cited as the biggest driver.
Half of those surveyed found negotiating with data vendors the most frustrating part of the data onboarding process, and 60 per cent say that evaluating the different vendors is challenging.
“Fund managers are becoming more reliant on quality data to support their increasingly sophisticated investment strategies. With rising costs to source and manage data, fund managers are increasingly seeking outsourcing solutions with specialist service providers that enable them to focus on their core activities of taking investment decisions,” explains Daniel Leveau, VP of investor solutions at SigTech.
“However, our findings reveal there is significant room for improvement in the quality of data provided to quant fund managers, which represents a huge opportunity for vendors and technology providers to offer data that is clean, validated and operationally ready.”
