Mohamed Hassan

Fund Operator: What is the basis for an ideal data service model? How does this differ across asset managers?

Marc Wright: I don’t believe that an ideal model is necessarily even achievable. I think the basis of an ideal model is allowing for specialisation. In other words, aligning expertise with the outsourcing service provided.

We want to identify as much as possible where this expertise could live outside of Russell Investments and assign these services accordingly.

We work with many different investment managers who manage assets in our funds, in addition to our direct investing.

"It is crucial for us to partner with service providers who have experience working with multiple different managers"

Therefore, it is crucial for us to partner with service providers who have experience working with multiple different managers and who can help us to centralise and normalise this information.

It allows us to focus more within our data operations and controls on what is required for the actual investment process.

This use of external expertise is generally the principle that we try to follow, but of course this is going to vary depending on the investment process and what is going on at each particular asset manager.

Fund Operator: It may not be plausible or necessary for there to be an ideal service model but what are the essential functions that should be retained across the board? How do you decide which data management functions to retain?

Marc: It is important to think about all of the principles around timeliness and accuracy of data, etc. We want to leverage as much of this as possible from a specialist.

For example, we might hire a firm with expertise in security pricing. Then I know that I don’t necessarily have to have a security pricing expert within my organisation, because I know that I can get this elsewhere and use this specialist across the board no matter who they are working with to ensure that my pricing is good.

What we want to retain is the unique understanding of how this data applies to our investment process, how is it used and more importantly, why is it meaningful.

"What I want to retain in my team is the understanding of the impact to the investment process itself."

Our internal team can then partner with our asset managers and help to explain the impact of this data to their understanding of the process, and ultimately, the improvement of this process.

We want to get better at our investment process and increase our understanding of what went well and what went wrong.

I want our team, as much as possible to understand how the data will impact this process and be able to articulate different metrics and controls that we can set up and perhaps send to a specialist.

What I want to retain in my team is the understanding of the impact to the investment process itself.

Fund Operator: Is a strategic in-house data management capability an essential component for firms to react to unfolding events?

Marc: I would say not necessarily. It is possible to outsource nearly everything.

However, this comes down to a cost-benefit analysis.  What is going to be the most efficient way to reach your data strategy and data management goals?

You are probably going to have to retain some of this in-house, which means that you have to have a deep understanding of the investment process and how the different data attributes within your data impact your ability to make decisions.

"I want my team to understand where we are adding value and how the data is contributing to that process."

Our data team at Russell Investments is pretty small, and we are going to continue to look for opportunities to partner with other firms. We will partner with other firms that bring value through their specific areas of expertise.

Again, it is more about what Russell Investments is doing that is unique. This is what I want my team to understand and where we are adding value and how the data is contributing to that process.

To read more on this topic, please download our 'Data Management For Buy-Side Investors Report' here.

 

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