Wall Street & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Trading Technology

04:36 PM
Connect Directly

Attribution Builds Trust with Clients and Consultants

Identifying how returns are generated, by who, and in what style help asset managers and pension plans manage their exposure and sell their brand.

eVestment, a global provider of institutional investment data intelligence and analytic solutions, announced a new attribution platform on its institutional holding database, eVestment Analytics. The attribution tool will provide deeper insight for asset managers, consultants and plan sponsors into how portfolio returns are generated.

This demand for attribution technology is riding the wave of tensions between firms and asset managers. Money managers are seeing pensions plans underfunded because of increased scrutiny on risk and where mangers are generating their returns, prompting more due diligence before making asset placements with managers. Consulting and plan sponsors are also coming to understand this kind of information is a natural part of manager selection and monitoring processes.

With attribution tools, managers can now walk up to their investor clients and consulting firms and say their investment process is a good one, here's the analysis that backs that up, and here's the evidence on not just returns but also on the holding side.

[Read about Wall Street's security concerns: Hackers to Exchanges: You’re Next ]

That's the feedback that propelled eVestment to launch the attribution platform on Monday to its 2,500 eVestment Analytic clients globally. Within the first hour 10-12 had downloaded the feature, followed by many more throughout the week and rave reviews. "We're excited about what it will mean to our clients," said Matt Crisp, eVestment COO in a phone interview.

"We've been hearing from our clients for years that they wanted one platform to marry performance analytics with their holding information. Some clients are holding a couple thousand portfolios in the database but we weren't providing tools to do anything with it. When we acquired StockTrib we mitigated the technology into our web bases SaaS offering, allowing our clients to do more in depth analysis. Now they see how managers are generating returns, if managers are consistent, and if they're doing what they're good at," says Crisp.

Another area clients were asking eVestment to address is overlap. Firms may have several analysts covering different securities, sectors, market caps and styles. But when you sit down and look, you often find high overlap, so consequentially sponsors are paying double fees for the exact same portfolio. Overlap analysis will help investment firms present their asset managers as differentiated investors and show what they do at a portfolio level. "They may find they don’t need 9 managers, they may find overlap is so high they only need 4 and still get exposure," says Crisp. "Attribution is aligning firms on where they're allocating dollars. It helps them be more efficient with their fee structure."

The attribution product also seamlessly integrates data already in the platform, a must-have feature for any financial service technology. Crisp says that in most cases, when people look for attribution they go out to buy a system, aggregate the data, upload it, match identifiers and attend to security details. It's a significant amount of manual work just to get set up. With the data already in the platform, eVestment's attribution tools are presented in an additional tab within the platform familiar to its users, and no data migration is necessary. "There's very little lag between logging on and getting report on attribution. Clients say it's what's appealing about the offer, it eliminates the manual work to get the output their looking for," says Crisp.

[For more on system integration read: The 5 Pillars of a Data Integration Platform ]

The three primary markets for eVestment's attribution feature are trade asset managers, pension plans and institutional consulting firms. Crisp expects hedge funds and fund of funds will have a lighter area of adoption.

Crisp concludes, "This product is solely based on what clients are asking for, which is a need in the market place to do attribution. We’re not the only attribution system on the market, but ours is more about integrating data and making it easier and efficient for consulting firms and pension plans to do analysis within the confines of the research."

Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio

Register for Wall Street & Technology Newsletters
Exclusive: Inside the GETCO Execution Services Trading Floor
Exclusive: Inside the GETCO Execution Services Trading Floor
Advanced Trading takes you on an exclusive tour of the New York trading floor of GETCO Execution Services, the solutions arm of GETCO.