‘Dirty’ Data Complicates Managers’ Alts Push
Asset managers and fund administrators are wrestling with major data hurdles in the alternatives space that could amplify operational problems as firms push these strategies to a broader investor base.
Some firms are trying to use generative artificial intelligence and automation to solve these issues but are still facing roadblocks, industry executives said.
Asset managers are grappling with disparate collections of documents, texts and other materials, such as limited partnership agreements, loan origination documents, private contracts, trade confirmations, and financial reports – exchanged between fund managers and LPs, pension funds, and other asset owners.
The data often needs to be scraped from PDFs, emails, spreadsheets, and even websites, making it difficult to extract and integrate into a data management platform.
Those “old school” manual processes can also lead to accounting, trading and other operational errors in the accounting process, said Jim Lewis, STP Investment‘s head of technology. The lack of easily accessible data and expertise in the processing of complex securities also makes it challenging to create pricing models and accurately reconcile positions and transactions on alts strategies, he added.
“It’s easy when you’re just pulling down pricing from Bloomberg for equities and fixed income,” he said. “[Alternatives] data is costly because it’s so disparate and dirty. They’re still using fax messages.”
Read more on what Jim and other subject matter experts had to say in FundFire here.
