Better returns for your endowment using IT as a differentiator?

First and foremost, the easiest way to fine tune their investment model’s input. To elaborate on a single example, by simply increasing the accuracy of management fees and liquidity conditions entered into the system, most analytical models provide better results, enabling you to make better investment decisions and thus generate better returns. Usually, fees and related terms are never seen again throughout the investment life cycle. Technology can, in its simplest form, assign an age to the data and ask portfolio managers to periodically review the data. More technologically mature organizations can easily leverage their existing hooks to the data provider’s systems and update real-time / near-real-time data.

Are the investment decision making staff able to perform scenario and sensitivity analysis easily when kicked off? Or are they in a situation where every time they need to do analysis, they have to run to someone who can do ‘programming’. Some products off the shelf do a fair job for this. However, is this process, and most importantly, the variables fine-tuned to your needs? And now, for the arguably, most important question, does your current process deliver the flexibility and results you expected? If your answer is ‘no’, technology can clearly bridge this gap.

Let us now examine the extent of throughput and productivity. How many managers are your analysts able to screen in a given week? 5? 10? 50? What if it was possible to view 5000 leaders a week? Additionally, what if the data for these executives were modeled out so that they followed the same process that your analysts follow? The nice thing about this is that your analysts now have a screened set of managers to look at; those who have already passed your team’s smell test!

To take it much further and a little closer to the cutting edge of technology, does your investment process include information available in public space? How valuable would it be for you to know that one of the portfolio managers in your largest hedge fund investment likes to climb mountains or swim with sharks … you get the drift. You may be able to factor it into the manager’s risk profile or negotiate better risk clauses for key people or hedge your investment, etc. Current day technology makes this possible – by throwing lots of unstructured data to wipe out vital pieces of data as when put together and running through a predictable analytics engine provides deep actionable insight!