Demand for alternatives puts pressure on asset managers: State Street
The alternative investment landscape is changing, with growing interest in digital assets and impact investing, alternative asset managers must turn to technology to meet the growing needs of institutional investors, according to a new study from State Street Corp.
With increasing pressures and demands for returns and reporting, State Street found that 57% of alternative asset managers surveyed said their investment operations are designed to scale with volume and complexity. growing, but 70% think they will need to increase the amount they invest in data storage, management and analytics to meet demand.
Responses to the survey come from over 200 alternative investment professions including private equity, hedge funds and real estate conducted between August and September 2020.
Despite market instability, changing business models and pressure on asset valuations, the majority (82%) of alternative managers surveyed believe their organization has been effective in meeting growing investor demand for transparency and additional data types.
Yet less than half (48%) said they have a good level of efficiency and effectiveness in their company’s technology systems, which underpins their use and management of data, according to the survey.
To avoid falling behind their competition due to inefficient data, hedge fund managers need to take a strong, technology-driven approach to meet the evolving needs of their clients and who will set themselves apart from their competition, said Vincent Georgel-O’Reilly, head of alternatives. segment, Europe, Middle East and Africa at State Street.
âAs a result, we expect outsourcing to gain momentum as businesses turn to outside service providers to get the most out of their data,â he said.
When it comes to how hedge fund managers think the current increase in uncertainty and risk has impacted confidence in their industry; 44% think it has increased, 27% think it has decreased and the rest (29%) think there has been no change.
The increase in environmental, social and corporate governance investments puts alternative managers in the early stages of planning for ESG implementation, with investors focusing on transparency and detailed reporting of their actions in this domain.
According to the survey, more than three-quarters (76%) of alternative managers believe that analyzing and reporting ESG data is important to the future success of their business, with 21% saying it will be extremely important.
When it comes to individual alternative asset classes, three in four believe that ESG will be of increased importance for private equity, followed by infrastructure (68%), hedge funds (61%) and private debt (58%).
The investigation was dropped just four days after State Street announced on June 10 that it had created a division to meet the needs of the popular alternative cryptocurrency. The division, State Street Digital, will focus on digital finance, expanding the company’s current digital capabilities to include crypto, central bank digital currency, blockchain and tokenization.
State Street also announced a series of strategic partnerships to strengthen its alternative offering for clients, including partnerships with iCapital Network and Virtus to provide data management platforms that help clients accelerate launches, establish access to large scale to wealth management channels, automate administrative processes and monitor performance. .
Main interests of ESG clients include decarbonizing the economy and improving IEI
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