Investment Operations

ASSET MANAGERS EMPHASIZE TALENT ALONGSIDE DATA AND TECHNOLOGY

SWIFT Securities View

Asset managers plan to invest in human research talent on a 3-to-1 basis over data acquisition or technology over the next three years, according to a new report from Coalition Greenwich.

Asset management organizations have spent billions of dollars expanding their internal technology infrastructure and acquiring new data feeds and will continue to do so. However, new research from Coalition Greenwich shows that asset managers are also aiming their future research budgets squarely at human talent. 

Two-thirds of the firms participating in a recent Coalition Greenwich study say they will target human capital over technology investments and data acquisition in their research spending in the coming year. The primary focus will be on hiring and retaining fundamental analysts, followed by portfolio managers and quantitative analysts. Well over half (56%) the respondents will seek an increase in spending for analysts with an ESG specialty.

“Tight labor markets have placed a premium on research talent, as many firms strengthen their research capabilities to take on new topics and hone their investment edge,” says Shane Swanson, Senior Analyst at Coalition Greenwich Market Structure & Technology and coauthor of Research in 2022 and Beyond: Investment Research Talent and Technology Solve the Deepest Data Challenges

Although talent is the top priority, asset managers will continue to invest in technology and analytical platforms that drive the modern research function. To address the challenges of data proliferation and integration, buy-side firms in the study have adopted a number of research management strategies, including adopting informal tools (74%), vendor RMS platforms (34%) and internally build RMS solutions (32%). 

“Asset managers are deploying increasingly sophisticated research management solutions (RMSs) to unlock the value of internal, proprietary data and intelligently integrate it with other frequently used data streams to help managers produce alpha and maximize their returns on investment in human capital,” says David Easthope, Senior Analyst at Coalition Greenwich Market Structure & Technology and report co-author.

Within their research technology budgets, buy-side firms are specifically focusing on improved and intelligent search (50%) and improving corporate access (40%).

Research in 2022 and Beyond: Investment Research Talent and Technology Solve the Deepest Data Challenges presents the complete results of a Q1 2022 study in which the firm interviewed 66 buy-side market participants in North America and Europe about the institutional research process. The report presents insights and data on institutions’ research budgets, hiring practices, technology investment and use of data and research tools, including RMSs.