June 29, 2018
Cutter Associates, a leading provider of operations and technology research and expertise to the investment management industry, recently presented new research on alternative data and investment accounting solutions to more than 240 members in four cities.
To meet the needs of a membership that’s growing worldwide, Cutter Associates is expanding meeting agendas and adding meeting locations to their established locations in New York, Boston, and London. As Mary Storrs, Principal and Director of CutterResearch explained, “CutterResearch membership is growing around the world. We have members on five continents now. We just held inaugural meetings in Los Angeles and in Sydney, Australia, and later this year we’ll be holding an event in Amsterdam for the first time.”
Members were especially interested in the CutterResearch presentations on alternative data, including active investment managers who see alternative data as an innovative way to generate alpha. A survey of members found that 75% of firms are already using alternative data in their investment decision-making process, or are investigating doing so.
But as attendees learned, evaluating hundreds of providers to determine which ones best fit a firm’s specific requirements can require substantial investments of time, money, and resources. The research revealed that close to three quarters of members were concerned with evaluating the quality of alternative data. As Kathy McDermott, managing director and co-author of the research noted, “Members face significant challenges evaluating data quality, integrating the alternative data into existing datasets, finding and implementing appropriate data management solutions, and finding and funding qualified data scientists.”
While alternative data providers are typically new and unproven, investment accounting providers and their solutions are mature. In fact, many of the investment accounting solutions CutterResearch reviewed in 2010 are still available in the marketplace. As Jon Chandler, senior research analyst and co-author of the research noted, “Because of their interdependency with other systems, investment accounting solutions can be difficult to replace.” Among members, 69% have been using the same solution for over a decade. “But,” Chandler added, “legacy investment accounting solutions are beginning to show their age, leading to inefficiencies and operational risk.” Facing cost pressures, member firms are looking to rationalize their system architecture across all functions, and the research revealed that 57% of CutterResearch members are considering changes to their investment accounting solution.
The full research reports are available to CutterResearch members online, at http://www.cutterassociates.com.
About Cutter Associates, LLC
Cutter Associates, LLC serves the operational and technology needs of the global asset management industry, providing clients the tools and services they need to be successful. By leveraging multi-faceted expertise and an unrivaled knowledgebase, Cutter Associates provides clients truly independent research, exclusive member-only events, custom operations benchmarking, and a global consultancy for strategic advice on and delivery of operational and technology excellence. Cutter Associates works with the world’s leading asset managers, providers and servicers. Headquartered in Hingham, MA, Cutter Associates has subsidiaries in Canada and the UK, and is on the web at http://www.cutterassociates.com.