A new Natixis Global Asset Management survey of institutional investor senior executives found two-thirds believe that increasing allocations to non-correlated assets, such as private equity and hedge funds, is an effective way to reduce risk. Almost half (49%) say investing in alternatives is essential to outperform the broader markets.
As a result, institutional investors plan to make “an even bigger commitment to non-correlated, alternative assets,” said John Hailer, president and CEO of Natixis Global Asset Management in the Americas and Asia.
Private equity is a notable hot spot. According to Preqin’s 2016 Global Alternatives Reports, 88% of investors expect to commit the same or more capital to the sector in the coming year. Real estate is another, with 82% of investors surveyed by Preqin set to maintain or increase their real estate allocation in 2016.
Opportunity hinges on the right support
Diversifying into alternative assets can mitigate investment risk and generate strong returns. However, as a recent study by investment management consultancy Investit and RIMES highlights, the complexity and cost of supporting these assets may outweigh the benefits if the operating model is not up to scratch.
Ready access to comprehensive, timely and customized alternative investments data to drive firms’ investment, risk and compliance decisions is crucial. Many firms though continue to grapple with manual and inefficient data processes.
Data is often stored in multiple systems and spreadsheets. Merging these incoherent data sets can be difficult, often manually intensive, costly and subject to risk.
Lack of standardization and centralization of counterparty valuations and reference data supporting the alternatives market, the difficulties of integrating and cross-referencing the necessary data, and a shortage of relevant expertise further magnify the data management challenges.
An alternative approach
Faced with these challenges, Investit Consultant Jerry Slason points to the “opportunity for investment managers to use a managed data service to provide a cost-effective approach that is scalable and improves the time-to-market for new investment strategies.”
Leveraging a high quality managed service allows:
- Benchmarks to be added quickly and easily to support new initiatives and strategies, enabling firms to be more responsive to clients’ needs.
- Users to insulate themselves from the headaches of vendor format changes, and reduce operational complexity and risk.
- Significant improvements in data management costs and scalability.
- Investment team members to have more confidence in the data quality, while freeing them to concentrate on core tasks.
With the right professional partner, a successful alternatives future beckons.
For more information on how RIMES can help support your management of alternatives data please contact us.