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Benchmark and Reference Data Provision: One Size Does Not Fit All

Successful portfolio managers know that good investment decisions rely on good information. Good information is a product of intelligently-designed systems. But, all systems – and the information they produce – ultimately rely on quality data. No system ever ingested bad data and produced good information. Remember: Garbage In; Garbage Out.

So, you take it for granted that your investment management systems – front office portfolio management, risk & return analytics, performance attribution, etc. – are using the cleanest, most reliable benchmark and reference data you can get. And that assumption is valid. Until it’s not. That’s when you find yourself trying to determine where that 30 bps tracking error between your portfolio return and the benchmark came from. Was it one security?  Several? And, which ones?

If you encounter this problem once in a long while, it may amount to an occasional annoyance. If you’re experiencing this several days a week, or it takes a long time to find the source of the error and get it remediated, you might find yourself playing the part of data analyst more often than you’d like. That’s not a snub to data analysts, mind you. It’s just that data management is not your responsibility.

Know Where Your Data Is Coming from and How it is Being Governed

Poor data governance is not merely about disruption to your day job. It could have a significant impact on your firm’s reputation if word gets out to your clients and competitors (as it will). Don’t take my word for it. There are plenty of headlines highlighting firms who have failed to exercise good data governance.

So, what can you do to ensure reliable data? First, find out where your data is coming from. And, we don’t mean your data warehouse or data hub – we mean before that. Where is your data warehouse getting its data? What checks are in place to ensure it is fit for purpose by the time it enters your systems? Or, are you using an integrated, end-to-end system that comes complete with the data?  If you’re relying on a fully integrated system, does that system specialize in data management, or does its data service come second to its analytics capabilities? Again, remember: Garbage In; Garbage Out.

If you’re not sure, it’s time to speak with your data operations team, or procurement folks…, or whoever makes the decisions on what to buy and from whom. If you’ve had no input into those decisions, you may want to start getting involved. The ways in which asset management firms source, collect, validate, remediate, transform, format, store, distribute and analyze data can be significant competitive differentiators. More and more firms are realizing that data is a strategic asset and needs to be effectively managed. Is your end-to-end system doing that for you? If you’re still reading this, probably not.

Counting on a single, end-to-end system to also include reliable data is applying a “one size fits all” solution to data management. That is not truly a data solution.  An end-to-end system that also provides data is probably concentrating more on providing a system than on providing quality data. And, as we stated at the outset, all systems – and the information they produce – ultimately rely on quality data.

Rely on RIMES. Count on Quality.

At RIMES, we know that one size does not fit all when it comes to data management, which is why the world’s leading global asset managers rely on us to solve their specific data management challenges. Our managed data services allow our clients to become more agile, streamlined and operationally efficient. The RIMES Managed Data Services are designed to deliver a quantifiable and sustainable improvement in business performance by relieving clients of the burden of data management. And, as the volume of data you must ingest and process just keeps growing, your need for more effective data management will keep growing too.

 

Read Our Client Case Studies

See the RIMES difference for yourself. Visit our case studies page to learn how many of the world’s leading financial institutions have leveraged the RIMES Managed Data Services to become more agile, streamlined and operationally efficient.


*Mike Bruno is a Senior Vice President and Head of Product Management (North America) for RIMES Technologies. Prior to joining RIMES, Mike was a financial products and business consultant, specializing in financial market data, fixed income securities and portfolios, market indexes and financial application design. He has also been an Adjunct Assistant Professor of Financial Management at New York University’s School of Continuing and Professional Studies and a fixed income instructor at New York Institute of Finance.

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