How Some Asset Owners and Managers are Using Technology to Gain Portfolio Insights

Technology, with human involvement, can improve efficiency and enable innovation in portfolio management, sources say.

Art by Pete Ryan


Many asset owners have sustainable investing mandates, but to find insights beyond simple environmental, social and governance metrics supplied by index providers requires analyzing alternative data using advanced technology.

APG Asset Management wanted to turn the United Nations’ Sustainable Development Goals into sustainable investments. To create a framework to translate those goals into sustainable development investments, it joined with PGGM, AustralianSuper and the British Columbia Investment Management Corporation to create the SDI AOP Design Authority.

APG’s Entis division used a combination of structured and unstructured data, artificial intelligence and machine learning, all with human oversight, to compile a dataset of more than 2,200 companies to measure how their products or services are linked to the U.N.’s goals.

The latest innovation relates to patents, and Entis scores 2,200 companies on 130 technology themes related to the 11 SDGs. Investors can learn where companies spend their research and development money and how that aligns with sustainability. The information is useful on two levels: sustainability and innovation, says Peter Branner, APG Asset Management’s CIO.

“It’s not only about sustainability, but it’s also about leadership in general,” he says.

In addition to managers like APG, asset owners are using technology to gain greater portfolio insight and are becoming more efficient, letting them spend on more value-added tasks. As markets become more volatile, CIOs need to know what assets they own, where those assets are and how they are performing, as quickly as possible.

Tony Payne, senior vice president of technology and innovation and chief technology officer at BCI, says it is making a big technological push as part of a strategic plan at the $154.41 billion asset manager for British Columbia’s public sector.

BCI is internalizing more of its portfolio management, Payne says, so its portfolio managers need to learn more technology and how to think digitally.

“Portfolio managers or investors, traditionally, focus a lot on processes. But to be relevant and to be ahead of the game, they need to be digital investors,” he says.

BCI uses several tools to support trade execution, investment management, portfolio monitoring and administration capabilities for its public markets and alternative asset classes. The fund created a data ecosystem it named ‘data marketplace,’ another way to explain the tech industry term of data lakehouse, which automatically connects the data from across BCI to where it is needed, eliminating extra time and increasing the accuracy in moving data.

Payne says BCI uses the data marketplace to create new, monthly Management Investment Committee reports, which helps inform how its members make decisions. “Our [data marketplace] service reduced the production time of these reports by 70%, transforming static reports into digital tools that tell the story behind the numbers. As flexible reports, they easily pivot to answer ‘what if’ questions from the committee, offering users myriad applications,” he says.

Building or Buying

Ashby Monk, executive director at Stanford Research Initiative on Long Term Investing, says asset owners generally use technology to focus on portfolio management, spending many of their technology dollars around collecting unstructured and structured data, normalizing all the different formats used by custodians, private markets managers and other third parties. Once the data is uniform, it can be warehoused and pulled into dashboards to reveal portfolio construction.

“Once the platform is in place, you can start to run novel analytics and augment that platform with alternative data and ESG data, and that’s where you get new insights about your portfolio,” he says.

Sudhir Nair, global head of BlackRock’s Aladdin platform, concurs. He says when CIOs speak to him about using Aladdin, they initially ask complex questions, such as how to use AI, but often struggle to answer the easier questions, like what’s in their portfolio, where the assets are located and portfolio performance. They have to answer those questions first before moving to advanced tools.

Answering these questions starts to set the foundational infrastructure and architecture of managing portfolios, says Eric Poirier, CEO of wealth management platform Addepar.

“What is that core platform solving for? It’s giving me a very precise understanding of every part of my portfolio, exactly where I am right now, so I don’t have to do that manually,” Poirier says.

The asset owners who are investing most heavily in technology have internal direct investment capabilities, Monk says. But to custom-build systems in-house also requires having a robust IT staff that can design data governance and procure analytics to decipher alternative data.

BCI custom-built its investment strategies system, which it calls the Strategic Asset Allocation System, allowing a holistic management of its clients’ investment strategies through the entire investment management life cycle and more sophisticated modeling. With enhanced data and calculation robustness, such as the use of forward-looking data, Payne believes BCI will improve the speed, depth and quality of communication for stakeholders.

Jon-Michael Consalvo, managing director at the Carnegie Corporation of New York, says the organization has improved how it uses technology internally to enhance decisionmaking

“We haven’t developed a fully centralized data warehouse yet, but we are making progress toward this,” he says, with the goal to be able to answer stakeholder questions quickly and accurately.

Technology investments allowed Carnegie to use investment techniques in areas like risk management and return decomposition that were previously out of reach because the necessary information would have been too costly to produce.

“It led us to correct for some overlapping exposures that wouldn’t have been immediately apparent with the resources we had 10 years ago,” Consalvo says.

Technology can help asset owners figure out what makes their organization unique. Nair says Aladdin managers often spend time with a client’s investment to better understand how they think about the portfolio. “We spend a lot of time first understanding what [are] their strategy and their strategic goals, how they think about their workflows … to map what they do today into what we feel is industry best practice,” he says.

The California State Teachers’ Retirement System uses both the Aladdin portfolio management system and multiple solutions from CalSTRS’ custodian, State Street Bank and Trust, among other software programs, to manage its portfolio, according to Rebecca Foree, media relations manager at $307.2 billion CalSTRS.

The pension fund is seeking ways to enhance its existing technology infrastructure, including how to add cloud-based data management and business analytics solutions. According to the spokesperson, these options could provide deeper analysis on complex investments, as well as more robust management of special-purpose datasets, such as those for CalSTRS’ net-zero initiative and diversity profiles.

How APG Uses Technology

The $553 billion APG uses many different types of technology, everything from Microsoft Dynamics for workflow management to a proprietary, in-house platform, EQUIP, for quant investing. Some globally based investment teams use the open-source programming language Python with machine-learning software TensorFlow and PySpark, which lets managers analyze large amounts of structured or semi-structured data, to create strategies and construct portfolios.

Branner says APG provides training for its programming staff, but also for portfolio managers, middle managers, executives and others as they push to further digitize. There is also a collaborative approach to using technology, as every quarter APG invites staff to discuss what data they have analyzed and to share their best ideas, both to inspire and to give credit.

“It’s important that you celebrate small successes,” he says.

Technology also enhances in-person interactions. APG uses business analytics tool Qlik for many of the internal and external reports they create, which can be accessed by clients at any time.

Client meetings are “more hands-on because clients can look at live data and they can drill down according to what the client is asking in the meeting directly,” Branner says.

Quantitative and Qualitative

The focus on technology is often a quantitative exercise or a focus on efficiency. Clint Coghill, CEO and co-founder of the Backstop Solutions Group, says technology may also lead to questions about why an asset owner has a particular holding or is using a certain manager.

“It’s really powerful to understand what you own, why you own it, what are the other alternatives? There’s quantitative information, and there’s qualitative information,” he says.

With BCI’s tech abilities expanding, Payne says he is excited to focus on innovation, using artificial intelligence and machine learning to begin creating signals for their investors to help them make good decisions faster and more broadly. He admits AI is a buzzword right now, but “it’s really how you apply it in organizations.”

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