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From Alternative to Mainstream
Chapter 3: Going and Growing Digital
From Alternative to Mainstream
Chapter 3: Going and Growing Digital
November 2021
Alternative investments were once a relatively small island in the investment industry, but investor demand for portfolio diversification and higher return potential are moving alternatives into the mainstream.
BNY Mellon, in conjunction with Mergermarket, surveyed 100 institutional investors and 100 alternative asset managers on their perceptions and expectations about future alternative asset allocations and their views on various sub-asset classes, and whether the two sides are aligned.
Chapter 3 of this report highlights how data, technology and outsourcing are the future of alternative asset management. Well before COVID-19, many alternative asset managers started shifting towards digital and data management systems to drive efficiencies and innovation. We heard clear indications that staying on top of developing technology, ranging from cloud computing to more nascent technologies such as blockchain and robotics, is crucial.
Moreover, wider usage of data represents a sea change in how organizations manage and distribute it, both within their enterprise and in communications with clients. Within alternatives, unstructured sources, data reliability and freshness of data remain major obstacles for managing data effectively. As a result, many alternative managers increasingly see outsourcing as a way of removing some of the pain points associated with setup and managing ongoing operations, especially in areas including risk, compliance, and performance monitoring.
Our next chapter will highlight the transformative effects of new products, new money, and new channels on the alternatives space.
Mastering digital technologies is essential to industry priorities, especially by reducing operating model costs, creating a data management model to support growth, and supporting risk management analysis.
- By the Numbers
- 68%of survey respondents considering outsourcing would seek support with risk, compliance and performance monitoring*
- 48%of respondents said aggregating data across fragmented systems was a top data challenge*
- 41%of alternative managers look to data and analytics to support performance and risk management*
* As identified by survey respondents
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