info@meradia.com
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SUMMARY
If you believe mastering enterprise data management (EDM) is a challenge, imagine the hurdles teams face managing alternative data (ADM). The alternative investment landscape isn’t limited to allocations for external and hedge fund managers; it also encompasses private equity, private credit, real estate, real assets, infrastructure, and more, each with its own unique intricacies.
Despite the availability of specialized vendor tools for alternative investments, many teams still heavily rely on Excel and manual processes to manage their data. The hurdles in ADM—internal or external—are significant when meeting analytic and reporting requirements. In today’s data-centric world, firms aim to get a comprehensive view of their investments to understand overall performance.
Chief Information Officers (CIOs) and other key stakeholders need to assess exposure, risk, and performance from a broad perspective rather than through isolated asset class silos. This paper delves into the complexities of integrating EDM and ADM to achieve this comprehensive view.
Beyond Enterprise Data Management Into The Challenges Of Alternatives Data Management
WHAT EDM HAS & ADM WANTS
At our investment operations and technology consulting firm, we focus on ensuring the “timely availability of trusted data” within our traditional data platforms and EDM programs. Achieving this goal involves numerous efforts, including:
- Enhancing operational efficiency through automation
- Implementing data quality metrics and tracking systems
- Maintaining comprehensive data catalogs
- Ensuring clear data lineage
- Establishing effective processes
- Upholding a commitment to high-quality, well-governed data
One advantage EDM programs have over ADM teams is access to relatively standard, structured, and consistent data. While this is a simplified view of the complexities involved in EDM, this paper does not aim to delve into those specifics.
THOSE FIVE ENVIABLE WORDS: “TIMELY AVAILABILITY OF TRUSTED DATA”
The first crucial word is “timely.” Valuing and accounting for our traditional assets at the end of the day, or intra-day, is straightforward. While there might be slight discrepancies in fixed-income pricing services, the data is easily accessible. We can obtain index and benchmark data from the broad market to specific segments and instruments.
In contrast, the ADM team often works with quarterly estimated valuations, with final valuations arriving after an additional three-month delay. How can we merge these two data streams to provide a daily valuation of our entire portfolio rather than waiting until the quarter’s end? Documents, spreadsheets, or PDFs may hide key valuations or transaction details.
Next, we consider “availability.” Enhanced offerings now use RPA techniques and AI/ML to collect and present this information in a standardized format, though these solutions are imperfect. The ADM team requires effective processes and skilled personnel to moderate, interpret, remediate, and approve the incoming information.
Lastly, we must tackle the challenge of “trusted data”. Data consumers must proceed cautiously without reliable, automated methods to aggregate statements and accurately reflect interim activities. Data can become outdated and incomplete due to capital calls or distributions without corresponding adjustments to the valuation.
Presenters should disclose the last valuation date and any adjustments for recent activities to build trust. When merging infrequently valued alternative data with the daily precise valuations of traditional investments, it’s essential to ensure appropriate completeness and final value metrics, helping data consumers understand the integrated data.
CONCLUSION
As ADM evolves and aligns with firms’ EDM strategies, recognizing the distinct challenges is crucial for creating and managing fully integrated environments. Transitioning from EDM, which relies on traditional on-premises structured data warehouses, to cloud-based data pipeline platforms opens up new possibilities. We anticipate ADM teams using these new capabilities and techniques to enhance their operations.
HOW MERADIA CAN HELP
When an investment management firm is ready to merge alternative and traditional data sets, creating a detailed plan and educating all stakeholders is essential. Charting a path to deliver incremental value and ensure resilience is vital. At Meradia, we provide a comprehensive toolkit to assist clients in overcoming these business and technology challenges, including:
- Designing enterprise data platforms
- Creating information delivery strategies
- Selecting the right vendor partners, tools, and platforms
- Integrating and transitioning new solutions into production
Contact our investment operations and technology consulting firm today to learn how we can help you integrate traditional investments, fixed income, and alternative data into a unified view for financial managers. Reach out to us at info@meradia.com or call 610-738-7787.