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“The research ecosystem involves collaboration, communication, and idea generation. These three pillars are very important,” said Andrea Mosconi, Global Head of Equity, Research, CMA, and Listed Services Product, during Bloomberg’s Next Generation Research Summit held in London earlier this year. “If you’re an analyst, a portfolio manager, or whatever your role is, idea generation will always be a part of the asset allocation and decision-making process,” added Mosconi.
While there’s tremendous pressure to invest in research, Mosconi stresses the importance of firm-level efficiency and the need to create cross-team research synergies. Consequently, delivering successful investment ideas depends on managing complexity and consistently outthinking the market all while never losing sight of process efficiency.
Investment challenges and trends
How should investment firms proceed in such volatile market condition? How can managers best make repeatably investment decisions under budget constraints? How can sustainable best practices in their research departments be implemented?
To help guide investment firms finding these answers, we’ve summarized four emerging trends and their implications for performing investment research in today’s market environment:
Trend #1: Investment research teams are growing
The investment analyst population continues to experience exponential growth, driven by industry changes, increased budgets, and the emergence of new analyst types, such as ESG analysts and Quants. According to research by Coalition Greenwich, 73% of firms expect fundamental analysts to be the priority investment area as they expand in-house research capabilities.
Trend #2: There’s no shortage of data, but it’s getting harder to gather and analyze efficiently.
Investment strategies are becoming more sophisticated, more global, and more cross-asset. New data types and recent trends, such as ESG and quantitative data analysis, create the need for new kinds of analysts. As complexity grows, funds need help to stay informed and ahead of the market due to information overload.
Trend #3: The right platform, powered by AI and ML, can help firms generate and protect their intellectual property and improve efficiency.
Investment teams face a troubled economy and a robust job market. There’s a growing need for platforms that manage and drive both automation and consistency of data. Intended goals are to save time on administrative tasks and ensure intellectual property is retained when an investment personnel leave the firm. Artificial intelligence (AI) and machine learning (ML) technology are revolutionizing how institutional investors conduct research. By transforming how the investment research team operates, funds can both increase productivity and find fresh alpha-generating ideas utilizing workflows such as AI-driven search and analytical capabilities. Bloomberg’s Research Management Solution is the only fully integrated platform covering every stage of the research process.
Trend #4: Profitability depends on cutting-edge investment research
To create alpha, asset managers must establish then maintain a differentiated investment approach in a fiercely competitive marketplace. While there are many ways for firms to stand out in the crowd, a scalable and robust research process is critical to attracting and retaining capital. A commitment to technological innovation is now a must have. When the right technology solution underpins their efforts, asset managers can more effectively raise capital, increase firm efficiency, and maximize their opportunity to uncover actionable insights that drive superior returns
Technology is the key to efficiency, competitiveness, and profitability
From our discussions with the investment community, it’s clear that the research process is becoming increasingly more complex and competitive. It’s also clear that technology is a key differentiating factor separating efficient and profitable funds from their competition. As a result, institutional investors must have a technology platform that dynamically supports and surfaces the key market intelligence and insights to stay one step ahead.
Asset managers must therefore commit to technological innovation to both stay ahead of competitors and create alpha for their clients. This now requires leveraging AI driven research capabilities and investing in research management platforms that automate administrative tasks and facilitate collaboration across teams.
Bloomberg builds leading-edge research solutions in support of these four core needs, purpose-built and customized to the needs of today’s modern front-office investment professionals. Learn more by registering for our upcoming webinar series.
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