The Lifecycle of Data in Context

How Data Proliferation is Shaping Alternatives

Using data to make investment decisions is not a new concept. What is new is the sheer volume and scope of data in existence today. Satellite imagery, credit card transactions, and sensor and real-time geospatial information are a few examples of the proliferation of new sources of data. According to research by IBM, 90 percent of all data existing today was generated in the last two years.

In this context, the question that many investors have naturally been asking is whether and where value exists within the morass of new and changing information. Armed with improvements in technological infrastructure to store and process data more efficiently, and advances in the mathematical and statistical techniques to analyze data more effectively, investors of different stripes are grappling seriously with understanding how they can separate the signal from the noise.

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How successful have they been? How have they approached data strategy and spending? Which tools and techniques are delivering the most value, and which are still unproven? What paths have firms pursued in hiring talent, organizing, collaborating effectively, and overcoming cultural challenges?

To find the answers, the Managed Funds Association (MFA) conducted one of the most comprehensive recent research efforts focused on investors’ use of data and analytics. The results are the product of interviews with the COOs, CTOs, heads of data management, general counsels, and other leaders at over 25 MFA member firms, collectively representing $1.5 trillion of assets, as well as a quantitative survey of MFA membership. In many cases, the research surfaced more questions than answers. We feel that is appropriate for a field that is evolving so rapidly and hope this report serves as a foundation for further dialogue within and outside the industry.

 

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