Asset owners grapple with growing data demands of asset allocation

Many asset owners such as pension funds and sovereign wealth funds utilise basic tools such as spreadsheets for asset allocation activities, a recent report revealed, although digital transformation is better in the Asia Pacific, according to another survey.
Asset owners grapple with growing data demands of asset allocation

Two recent surveys on data management among asset owners highlight the rising importance  -- and need -- of technology and holistic strategies to manage increasingly complex infomation.

One survey noted that despite the push for digital transformation, the scarcity of expert resources and legacy systems inertia are hindering the shift to dedicated portfolio management systems.

About 55% of asset owners surveyed globally utilise basic tools such as spreadsheets for asset allocation operations, a significant increase from 40% the previous year, a joint survey by Milestone Group, ValueExchange, RBC, and Citisoft showed.

The Asset Owner Transformation in 2023 report highlights that only 41% of respondents use a dedicated portfolio management system for their total portfolio view, suggesting a high reliance on inefficient methods like spreadsheets.

The usage of excel and its variants by more than half of asset owners to consolidate investments and exposures, particularly in the pensions space and Pacific region, is concerning.

Marian Azer,
Milestone Group

“Asset owners need to move away from personal productivity tools like spreadsheets in this uncertain market. Adopting more sophisticated technology can streamline asset allocation decision making, react faster to market events, and gain the edge for end investors,” said Marian Azer, global head of product of Milestone Group.

Spreadsheets, whilst cost-effective for quick analytics, pose significant risks when incorporated into the core operating model.

The report emphasised the risks of manual errors in fields like asset allocation management and regulatory reporting.

“Those with the most efficient software and future-proofed operating models will be best equipped to succeed in the challenging global investment environment,” stated Azer.

Without proper governance, these errors can affect decision-making and cause compliance issues.


The Milestone Group study revealed that 43% of asset owners aim to upgrade their systems, with 45% prioritising enhancing their data management capabilities.

Yet, modernisation faces obstacles. The report identifies the lack of expert resources as the main reason for transformation project failures.

Other hurdles include the lengthy duration of projects before realising desired returns and the difficulty in defining a compelling business case.

Barnaby Nelson,
Value Exchange

“82% of asset owners want to change their investment operations this year. But large-scale transformation isn't easy. Asset owners must prioritise the most strategically important and sustainable changes to achieve their long-term goals,” stated Barnaby Nelson, CEO of Value Exchange.

For larger asset owners in North America, Europe, and Australia, master custodians continue to play a central role, whilst in-house development is crucial for Asian asset owners’ exposure management.


Another recent survey, meanwhile, suggested that asset owners, especially in the Asia Pacific, are getting better at implementing a holistic data strategy.

The State Street Data Opportunity Study 2023 found that 46% of Asia-Pacific investment institutions have implemented a holistic data strategy, significantly higher than their counterparts in the Americas (30%) and EMEA (31%).

“Asia-Pacific institutional investors aim to evolve their operations, realising the need for further improvement,” Kevin Hardy, head of Singapore and Southeast Asia at State Street, told AsianInvestor.

Kevin Hardy,
State Street

The State Street study revealed that their data architecture is complex due to a mix of legacy technology and newer systems, causing difficulties in data-driven decision-making and cost-effective technology maintenance.

"Despite the complexity, internal technology teams are managing well, but the ability for better data-driven decisions is lacking,” said Hardy.

Still, 75% rated their data capabilities as nascent or intermediate due to resource and time constraints.

The State Street study found 77% of respondents believe a large portion of their current technology needs upgrading, potentially leading to prioritising technology investments over talent acquisition due to skill shortages.

Overall, both surveys indicated the growing complexity of data strategies and the need to bring in enhanced technological solutions to meet the evolving demands of portfolio management and asset allocation for asset owners. 

¬ Haymarket Media Limited. All rights reserved.