How can data analytics help asset management companies make better investment decisions?
Data analytics has transformed the way industries across the world function; it has introduced new avenues for predicting changes in the market, making better decisions, designing better work structures, and so much more.
Today, data analytics has become a staple in many industries and analytic techniques like machine learning, big data analytics and artificial intelligence have become common in the decision making process.
Asset management companies, in particular, are leveraging data analytics to help people make the best use of their investments and grow their finances over time.
In the last two years, Australian asset management companies have invested $1.03 trillion on behalf of their clients despite the pandemic situation, and this figure is expected to grow in the coming years.
Data analytics has played a major role in this uptick in investments, and in this blog post, we explore how data analytics helps asset management companies make these important decisions.
Data analytics improves data acquisition
To make better investment decisions, asset management companies require large amounts of data, which is abundant nowadays thanks to technologies like IoT and the internet.
That said, making sense of this large pool of data and leveraging that to make investment decisions can be a complex process with legacy analytics methods.
With data science and modern data analytics platforms, however, asset management companies can assimilate the data and use the insights gained about the market conditions to make informed investments.
AI and big data deliver better investment insights
Sometimes, asset managers make investment decisions solely on stock price fluctuations and their clients’ prospects, and these decisions may not always be very accurate.
By using the power of big data analytics and artificial intelligence, asset management companies can gain valuable insights by analysing unstructured and structured data.
Along with techniques like machine learning, AI can pick out useful information about investment markets and create summaries and steps that asset management companies could take when they make their investment decisions.
Data analytics improves client profiling
Client profiling is a vital part of any asset management company.
Through client profiling, asset managers can get a clear understanding of the preferences, expectations, and requirements of their clients, allowing them to formulate investment strategies to meet these requirements.
With data analytics, asset managers can use data from different client segments to identify characteristics that make them different, making the client profiling process more accurate and efficient.
With good client profiling, an asset management company can make more specialised financial decisions for their clients.
It enhances risk management capabilities
Risk management is a crucial part of asset management.
Failure to understand investment risks and execute strategies to mitigate them can lead to major financial repercussions for the company and its clients.
The usual approach to investment risk assessment is through identifying standard deviations in share prices by using legacy tools like spreadsheet. This approach, however, is not very accurate for understanding risks as it does not take into account every market variable.
With new data analytics tools, asset managers can create stress models for stock market performance and company operations, allowing them to test different scenarios that simulate various market conditions.
With the help of these scenario-based analytics, asset managers can optimise their risk management processes and make stress-free decisions.
Improve asset management decisions with data analytics
Data analytics has enabled asset management companies to serve their customers better by making better and more effective investment decisions.
Through data analytics, asset managers can get a better understanding of their client requirements and how market conditions can affect their investment decisions, helping them optimise their investments to meet client requirements.
If you are working in asset management and are looking to enhance your SAS data analytics experience, check out our Selerity Analytics Desktop.
As SAS Managed Service providers, we are dedicated to helping you optimise and manage your SAS environment. Get in touch with us for more information.