By Russ Elliott | Head of Asset Management Market Intelligence
Institutional investors and investment consultants are spoiled for choice when it comes to picking the next asset manager for a portfolio. To support their decision-making process, allocators rely heavily on databases to help pinpoint the managers who are best suited to meet their needs. Even before a formal search is announced, allocators and consultants conduct complex screens within databases and generate lists of managers and strategies that can be additive to their investment programs.
While database population may seem like an extra hoop to jump through or an ineffective use of resources for an asset manager, it is critical to capital-raising success within the institutional space. Before making any investment decision, investors use one or more databases to uniformly filter, compare, and analyze potential opportunities. This means that asset managers who forego a thoughtfully planned database strategy risk missing out on a significant segment of potential investors.
For asset managers, effective database population is a valuable “one-to-many” marketing tactic that means thousands of asset owners will have visibility into their strategies, many more than managers would otherwise have the resources to reach. There are five key database strategy fundamentals that asset managers must master to effectively facilitate engagement with institutional investors and their consultants.
1. High level of data completion
It might be tempting to provide just AUM and performance data when updating a database profile, but more than ever investors are looking beyond these headline metrics and want to drill deeper into the data.
The Nasdaq eVestment database features population scores for each asset manager profile based on how thoroughly it is completed. Managers with the highest population scores in eVestment received 16x more investor views than the least populated profiles and 4x more views than median profiles. Our consultant and asset owner partners recommend at least 80% completion with some allowances based on product type and asset class.
Managers with the highest population scores in eVestment get:
16x more investor views than the least populated profiles
4x more views than median profiles
2. Submit historical data
Investors and consultants focus on more than just the most recent quarter of data when conducting due diligence. Since inception performance is required to warrant meaningful consideration from an allocator and it is recommended to have at least 3-5 years of quantitative historical data available.
3. Consistent & timely profile updates
The consistency and timeliness of an asset manager’s database updates are as important as the overall quality of the submissions.
Analysis of user activity on the eVestment platform finds that there is a spike in screening activity between 5 and 15 business days after a quarter-end. This means that asset managers who fail to provide data in this timeframe might be missing out on featuring in a significant percent of screens.
Screening activity spikes between 5 and 15 business days after a quarter-end.
4. High level of accuracy
All managers prioritize accuracy in their reporting, but data entry errors do happen. As part of a complete database population strategy, asset managers should have systems and checks in place to flag potential inaccuracies. Flags that check for significant AUM, exposure, or performance swings can be an added layer of security that ensure managers are always reporting their data 100% accurately.
5. Tell a differentiated story with a well-written strategy narrative
For the 27,000+ strategies on the eVestment database, differentiation is key. A well-written strategy narrative and thorough qualitative details about your firm are just as important to investors and consultants as strong performance.
Qualitative questions have consistently been added to eVestment and other databases due to consultant and investor demands. In recent years, there has been a steady rise in interest in fee information, ESG, and DEI. These qualitative details can help an asset manager differentiate their firm from others by highlighting unique approaches to investing and risk management as well as a strong emphasis on good governance and business continuity.
Master your database strategy
For asset managers to be successful in attracting capital from institutional investors, they must master their database strategy and ensure that their strategies are well represented on all major databases.
The Nasdaq eVestment platform boasts over 1,200 investor clients who conduct over 150,000 manager screens annually. Nasdaq tracks all these screens, which yield over 600,000 annual product profile views and as a result we are acutely aware of what a successful and effective database profile looks like.
About the author
Russell Elliott is a Head of Asset Management Market Intelligence for Nasdaq eVestment. He joined Nasdaq eVestment in April 2016 from Amundi Smith Breeden, where he served as Vice President of Consultant Relations. Prior to Amundi Smith Breeden, he worked in similar roles with TIAA-CREF Asset Management and Wells Fargo Asset Management in both the United Kingdom and the United States. Russell began his investment industry career in 2006. He attended The University of the West of England, where he gained a BA (Hons) in Business Studies and Combined Science. Russell also graduated Beta Gamma Sigma with a Master of Business Administration degree from The University of North Carolina at Charlotte. In addition, he is Series 7 & 63 registered and has also obtained the Investment Management Certification from the CFA Institute.