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In today's webinar from Talking Heads events, I'd like to turn things over to maybe the President and founder of Talking Heads Events. Meg, it's all yours.00:00:09:04 - 00:00:46:02Speaker 2Wonderful. Thank you, Karen. And hi, everybody. We have a terrific audience lined up today for an expert panel. This discussion is about a very key topic in alternative investing, looking at customization of data in private markets, investments in the private markets is on the rise. And State Street did a survey recently of both managers and institutional investors and found that everyone intends to invest more and increase their allocations to private markets.
00:00:46:15 - 00:01:11:23Speaker 2Excuse me. And as many of you know, the data there can be often unstructured and highly complex. So very challenging to get a snapshot of of of of where you are. And and they want to talk to you today about how you can customize your data to to get what you need to give to your investors. If you're a manager or how the investors can can get it from their managers.
00:01:11:23 - 00:01:48:16Speaker 2So anyway, we should get into that. Welcome to everyone. This is the fourth webinar in our series of five for our Santa monica series. We've got one more that will be next Friday. I realize we're getting close to the holidays, but we're going to take you out just one more week. I just want to say that the speakers today, as I always remind you, are really speaking from their own experience and any of their insights and the opinions that they voice today in the webinar are their own and not necessarily those of the firms for which they work.
00:01:48:16 - 00:02:23:01Speaker 2I also want to thank our sponsor firms, starting with State Street on this one in particular. Thank you so much. In a CAP Investment Management also efficient capital management bowtie research Group. Graham Capital Management. Marlette Asset Management. O'Bryan Investment Group, Video Financial and Wilton Investment Partners. Very grateful that you made this series possible this fall. And I also want to thank Emma Casa and Kiah, who are our association partners, and help us get the word out.
00:02:23:01 - 00:02:51:15Speaker 2Just delighted to partner with them. So let's get into it. Why don't you come on Jan Mark time. Here's our panel coming on board. Wonderful. And I'm going to disappear. You guys have a fabulous conversation. I'll see you later. Two close up. Thank you. Thanks, Meg. Hi, everyone. Good morning. My name is Marianne Ore, and I'm the private markets product manager at State Street.
00:02:52:05 - 00:03:20:05Speaker 2With me today are Mark Filmstrip, head of Platform and Alternatives Architecture at AllianceBernstein. Dan Tribe is Head of Alternatives Product at State Street and Tom Bell, Customer Success at Mercatus. Welcome, Jen. Tom Mark, I'm looking forward to working with you today and talking about data customization and private markets. So we're excited to chat with you today about the customization of data in private markets.
00:03:21:00 - 00:03:51:27Speaker 2Private markets are shifting as investors are pouring money into the asset class, as the hunt for alpha intensifies in private markets, which we define as real estate infrastructure, private equity and private debt are becoming commoditized through the retail channels. So with this revolution, the need to more effectively and efficiently, efficiently manage, analyze and report on both structured and unstructured data is necessary as improvements in data could drive alpha.
00:03:52:13 - 00:04:20:03Speaker 2But asset owners are also demanding better, transparent reporting. So as Meg mentioned a few minutes ago, J Street recently completed a survey of 170 private market asset managers and asset owners. And we asked these investors about why they invest in this asset class where they see the private markets heading in the next 3 to 5 years and where they struggle in terms of data management and ESG reporting.
00:04:20:21 - 00:04:45:14Speaker 2So we'll talk a little bit about the survey results during our chat today and we'll also at the end, Ken will provide a link if you're interested in downloading the white paper that was just published recently. So today, again, we're going to discuss how a comprehensive data strategy. So one that spans front to back office and public to private markets can help investors successfully navigate this market.
00:04:45:27 - 00:05:07:22Speaker 2As we heard from the survey that data quality and standardization is a key barrier to increasing private market allocations. And we'll also look at the poll results in a few minutes as well to see. It'll be interesting to see where you polled versus some of the survey results. So let's get started. Jen, I'm going to start with you.
00:05:08:24 - 00:05:55:28Speaker 2Asset owners and asset managers we surveyed expect to increase investments in private assets in the next few years. What does this mean for multi asset managers in terms of managing their data from both public and private markets? Thanks, Marianne. Thanks for the question. Thanks for having us today. You know what what I think that the survey confirms for us and what we're hearing from asset managers and our clients is that as the need for private markets exposure into their portfolios, you know, we see it not only across existing private markets managers today that may invest in one segment of private markets and who are also expanding into the other subsegments that you mentioned in private
00:05:55:28 - 00:06:29:07Speaker 2markets, we're also seeing traditional managers look to acquire that skill set, and there's different ways that they're going about that. But it's clear, like the data comes from, you know, multiple forms, whether it's their valuation, ESG risk exposures, their fund accounting data, their cash availability, liquidity, like, you know, that data needs to be liberated. And so it is, you know, become a gating item in certain cases for people to gain access to the asset class.
00:06:29:27 - 00:06:41:07Speaker 2So, you know, it definitely validates for us that there was a business imperative to help drive some technology and solution towards standardizing that.
00:06:43:21 - 00:07:08:11Speaker 2Thanks, Jeff. And as you can see on the screen now, one of the results of the survey is that half of the asset owners do plan to increase their allocations to private markets with real estate just over a third. So that's interesting that more and more real estate investments are becoming interesting to the owners and managers of the firm.
00:07:08:28 - 00:07:20:03Speaker 2So as we wanted to continue on, I think, Tom, I wanted to talk to you a little bit about some of the deeper requirements in data management for private markets.
00:07:22:06 - 00:07:46:16Speaker 2So some of the data that we saw, we asked investors how they currently manage data, and 69% said that their data is siloed in spreadsheets or point solutions. So this data for valuation, performance, risk exposures, fund accounting, etcetera, as Jen mentioned, is all housed in a different place. So Tom, what does it mean on a practical level for an asset manager trying to scale in the private markets?
00:07:46:16 - 00:08:08:22Speaker 1Practically, it's a huge challenge, I think. I think that's why we all joked before this about dressing up as an Excel spreadsheet today for the webinar right. Look, I think the most up or not. Yeah, you're welcome. You're welcome. Yeah, I think I think Jen touched on this when she was just talking about investors a little bit in the different types of data.
00:08:09:03 - 00:08:32:11Speaker 1I think that's the core issue. Right. What we hear more than anything is investors want more information than ever and it's also more manual than ever for some of the reasons that she described. I mean, Marianne, you just said it 69% of the survey relies on siloed reports. I think it said not even 20% have interactive online tools between them and investors.
00:08:33:01 - 00:08:57:07Speaker 1And I thought the survey was really interesting for why when you start to look into it, the reasons that it highlighted in there were costs, a lack of a knowledge of what alternatives actually exist to solve today and a lack of urgency around the problem. And those the results strike me as symptoms of a high growth industry. And that's what private market is.
00:08:57:07 - 00:09:19:29Speaker 1It's high growth. There's not a lot of time to step back and try to solve this. And if you think about a lot of the folks that took this survey, they're shifting from a public to a private investment. I think it said they're going from about a 25% investment in private to about 35%. That's a pretty mature way of managing data to a fairly immature way of managing data.
00:09:20:22 - 00:09:39:28Speaker 1And so I think the the awareness of this is going to be really important. I'm big on on examples and I think Mark this one, I'll speak to you a lot. And I know Jen and I talked about this is just take a fund manager that's just trying to see their NAV and over time and drill into that really quickly.
00:09:40:10 - 00:10:08:02Speaker 1That sounds simple. That is that is thousands of raw accounting transactions that are today cobbled across probably 40 spreadsheets that come out of different systems. And somebody has to normalize that just to analyze it. That is identical to what you would have seen ten years ago from an individual trying to look into their own personal portfolio. They would download information from different bank accounts, credit cards, investment holdings.
00:10:08:02 - 00:10:28:10Speaker 1They would put it together themselves. They would analyze it. Now you have minutes. Now you have personal capital, you have things like that. And I think what the industry in private markets needs is more of an awareness that they're there are things that can solve for this today and also the value of that problem to help drive some of the urgency.
00:10:29:29 - 00:10:56:07Speaker 2Thanks, Tom. I agree. We are in a what we're calling the revolution of private markets. So let's dig a little bit deeper on the requirements in data management for private markets. So, Mark, your firm, AllianceBernstein manages over 700 billion and assets to the significant allocation to multi asset and alternatives. How has your investor data requirements changed over the past few years, specifically as it relates to your private markets funds?
00:10:57:27 - 00:11:24:23Speaker 1Thanks, Marianne. We've seen a lot, a lot of change over the last couple of years in our private, private area, especially as Tom alluded. I think from an investor standpoint, there's there's there's this awareness or desire to have things up to date real time to be able to pull up your iPhone and and see all sorts of information from from a few seconds ago.
00:11:25:24 - 00:12:12:23Speaker 1And you you try to layer that that desire, that that expectation that everything is is is real time instantly available to a very complex world behind it, where many of the of the alternative investments don't don't have real, real time data available. Right. So if you're if you're buying a listed equity or a mutual fund there, there are markets and exchanges where whether there's tech data that you can get any moment of the day and an end of the day snapshot if you're trying to see what your portfolio investing in infrastructure or real estate, you can't you can't just say, oh, the latest value of this skyscraper in Midtown is is worth X.
00:12:12:23 - 00:12:53:25Speaker 1You know, it doesn't it's not it's not quoted like that. So there there are behind that there there are many valuations that occur that complex models that happen on a periodic basis. And what we're trying to do is find ways to marry the the scrutiny and the detailed effort that needs to go into pulling together those sorts of valuations and putting that into a system and user experience where clients can see something in real time and their private assets, along with their their public assets, all in one cohesive experience.
00:12:54:18 - 00:13:20:20Speaker 2Thanks, Mark. Maybe can at this point, we could pull up the pull and take a look at some of the questions and answers that our panelists have shown. So for the first one, how do you identify yourself? It looks like most of our panelists, 33% or a third are investors, probably coming in a close second are fund managers and solution providers.
00:13:21:16 - 00:13:45:28Speaker 2So we have, I think, a full mix of asset owners, asset managers and solution providers here in the cloud, which is great. The next question about currently investing in any of the following private markets, it looks like it's straight across private equity, private debt and real estate infrastructure coming in about half. But at the same time, you know, gaming.
00:13:45:28 - 00:14:15:28Speaker 2And then we do have some here on the call who are currently not investing in any of the current private markets, what we call subsegments. So I think that's that's interesting as well. And then on the third question is your investment data is currently siloed or on separate spreadsheet and almost half to. Yes. And then some it's a mixture of siloed and consolidated is 11%.
00:14:16:28 - 00:14:39:22Speaker 2And then we have the know is a 22%. So we're still you know, as we've just been talking about, seeing that investment data that is is siloed or there's a mixture. And, you know, we are in the revolution now to to try to move that forward and become better able to manage the data within the platform, the different subsegments.
00:14:39:29 - 00:15:06:02Speaker 2Number four, if you're an asset owner, do you request customized data from your managers? Yes. 11%. No, 22%. Working towards customization is 22%. And then we did have a large, not applicable 44%. So I think this is a little low. I don't know if any new mark, Tom or or John, if you had any any thoughts on this one.
00:15:06:02 - 00:15:28:17Speaker 2But I would have thought that we would have seen a higher customize requests. But I think it's it's good that it's it's lower than we would have expected. Any thoughts on that? I would just say, Marianne, that it's encouraging. I think that it is not as high as we would have expected. And kind of what's in our survey results.
00:15:28:17 - 00:15:55:20Speaker 2But I but I also think, given the sophistication of the people on this call and they're probably more comfortable with the asset class, I think we tend to see, at least from the perspective of a traditional manager coming into the asset class, they have a much lower threshold. They want they want to replicate the equity market. And as Marc alluded to before, you can't really do that.
00:15:55:20 - 00:16:10:04Speaker 2You're kind of comparing apples and oranges. So maybe that's part of the reason for the dispersion from our survey results. Yeah. Whether any of us.
00:16:10:17 - 00:16:36:02Speaker 1I thought that was really interesting, too. I think there's a there's an element in there of what is customization as well. And I'll just give a quick example. There's actually a mutual client of ours that we were this is that's about six months back. They they asked and they requested about 40 different reports to be to be automated with us.
00:16:36:02 - 00:16:56:27Speaker 1And we said, okay, those are all customized. They said, Really, these seem like they're they're fairly standard. And we said, no. I mean, you know, here's some examples of what what others might leverage, that it's very similar. And the more we went through it, they said, give me the 8020. You know, what's what gets us the maximum amount of value with the least amount of effort of customization.
00:16:56:27 - 00:17:21:00Speaker 1And when we showed them what that template looks like, there was always an anomaly or an issue that would come up because of a specific type of asset class that they were in that would change what one of those reports looked like. And so I think there's there's actually usually a thought of we're not really customize, but once you start to get into what you actually want and need for, you know, as Mark mentioned, that skyscraper in the middle of Manhattan.
00:17:21:16 - 00:17:27:13Speaker 1Right. It just becomes customized over time and people don't really recognize it.
00:17:28:05 - 00:18:04:11Speaker 2Thanks, Tom. So the last poll result is talking about achieving data driven, operational alpha and, you know, it's currently in place to just point. There's a lot of participants on this call who have been investing in the private markets for quite some time and have good processes in place. There's some with currently development and then there's aspirational. So that's kind of a segue way into probably our next topic, which, you know, we've spent the last few minutes of this call talking about challenges.
00:18:04:15 - 00:18:16:16Speaker 2So let's talk about solutions and why don't we start with operational alpha? So Mark, as an asset manager, how do you see data assisting you with the ability to drive operational alpha?
00:18:17:24 - 00:18:56:07Speaker 1So a number of ways. One is risk risk reduction and and two would be efficiency. And I think those two go hand in hand. Most most often of the time, as we as we go through our own platform here, the we we're continuing to grow, which is which is, of course, a good thing. But with that come more, more volume and more more nuances of bearing products and funds and more need and desire to have that all happen faster.
00:18:56:09 - 00:19:27:09Speaker 1Right. So we kind of have these two conflicting ideas of greater complexity, greater volume, and less time to do it. So having having data and having technology in that it had and control is is the way that we we can achieve the operational alpha. We are constantly looking at different processes that we have and evaluating what can we do, what are the pain points and what can we do to remove those?
00:19:27:25 - 00:19:59:13Speaker 1So something is as simple as uploading documents or capital account statements from an administrator to to a website so that our end clients might see it on on a secure portal. You know, several years ago that might have that might have been a very manual thing where someone would have downloaded the documents, saved them on a share file, reviewed them, and then moved them to another system and uploaded it and then triggered email alerts.
00:20:00:03 - 00:20:21:23Speaker 1You know, so many, many different steps along the way, all of necessary to make sure that we're we're maintaining get controls and validation. But if you if you if you look at that end to end process that could take hours and hours to to accomplish. And if you're just doing that for one fund, you know, that's that's hard enough.
00:20:21:23 - 00:21:03:02Speaker 1But if you're trying to grow the platform and expanding to, you know, many, many funds that all of a sudden becomes becomes a burden. So looking at looking at that process and seeing what can we do to to automate through good, good data tools, you know, standard naming conventions as standard interfaces with with our partners, standard exchanges, both, I would say with external partners as well as internal partners because there's a lot of information that's moving across systems within within our own enterprise and then saying, what can we do to, to, to automate?
00:21:03:02 - 00:21:31:25Speaker 1And we've seen processes like that where it took hours and hours and reduce them to 10 minutes. So each time we do that, we, you know, we have a minor solitary victory. And then we look at the next process, which is now also taking a lot of time. So it's a very iterative process where we can go, you know, from from event and cycle to the next one and see what can we do to improve it.00:21:32:10 - 00:22:02:18Speaker 1Another example I would I would give would be around just client onboarding where, you know, ten, ten years ago we were looking at at subscription documents for for clients coming into these funds. And that process still exists right there. There's a high bar for either accredited investors or qualified purchasers that need to assert and represent that they're they meet the sophisticated investor criteria to go into such an investment.
00:22:03:14 - 00:22:35:24Speaker 1So there's a always a fair amount of legal preparation, both in our offering memorandums that describe them and an investment, as well as the risks that we disclose to make sure everyone is fully informed as they come in. Upon receiving those materials, a client would years ago would have would have actually received a FedEx from their advisor with all of these all these printed out.00:22:35:24 - 00:23:14:20Speaker 1And then, you know, in the back of it would be a 30 page booklet of the subscription document, which they could then, you know, flip through with the sign here stickers and fax that back to someone who would then, you know, manually type that in. We now have things like DocuSign and other digitization in the mix where this all can happen online in a secure method with materials being transferred back and forth with which, which is which is great and that it can reduce the, the back and forth and the time to get something done right.
00:23:14:21 - 00:23:42:22Speaker 1You're not waiting for something to be delivered over the course of of an overnight or courier, but you can have that real time collaboration. So the more the more that we look through the channel and the different experiences we, you know, we find different areas where we digitize and then try to to normalize so that we have a consistent process across all of our funds and the whole platform.
00:23:44:12 - 00:23:46:19Speaker 2Mark, I said, I'm sorry. Go ahead.
00:23:47:08 - 00:24:12:12Speaker 1Yeah. Thanks, Marianne. Couple of things that you mentioned in really struck me because so much of the beginning portion of what you were saying was around the time when I was thinking about driving Alpha, it's usually, you know, it's a function of time, cost or risk, right? You can probably change one of those dynamics the time element is is obviously apparent, right?
00:24:12:19 - 00:24:35:17Speaker 1The time you can save and just people then the cost of that. But what about that? How do you all when you're thinking about those investments, how do you how have you all thought about the risk side of it and maybe the time and what it gives you back? So, for example, not having to spend as much time to get everything together so that you can make a decision, maybe make you make it faster and buy that skyscraper on time.
00:24:35:17 - 00:25:09:13Speaker 1Right. Get your get your bid in first or the risk. What's the risk of using the wrong information with an investor? Do you all you all think about things in those dynamics? Yeah, I think we're we're constantly thinking about about risks. Right. That we that's that's part and parcel to to to the financials service industry. I would say you want to if you're if you're making an investment, you're your investment thesis is only as good as your the information on which you base that.
00:25:09:13 - 00:25:42:07Speaker 1So the more the more rigorous controls we have around data data and take an evaluation the the the better a the should it it traditionally it comes from a very rigorous research DNA. And I think that that persists very much still today, where even though we're in new new markets and spaces that we weren't, we might not have been when the firm was founded 50 years ago.
00:25:42:26 - 00:26:18:12Speaker 1That that need to have have a lot of indepth understand ing of of whatever it is we're going to invest in or think about investing in still still very important. An example would be in this is from more from the portfolio manager standpoint where they might have an investment thesis based on some some data that has come available and that that opportunity might, might exist for for a window in time.
00:26:18:12 - 00:26:42:18Speaker 1So traditionally, we might have an onboarding where if you if you say, oh, I go talk to that the technology group and say, oh, I want you to take this data and normalize it and put it in a production system and test it before you get there to make sure that it's all working correctly, that that could be several months to to get that right.
00:26:44:13 - 00:27:31:24Speaker 1But if you wait, if you go through that whole the whole opportunity, that whole lifecycle, perhaps some of the investment thesis might have dissipated by the time that you're you know, you're ready to use it. So there's there's a need now to say more than ever to be able to experiment, I would say, or use rapid prototype is a is a better way of putting it where we take data and and put it in a controlled way, validate the thesis and then if it if it turns out that it will be actionable, then we continue to go through the robust lifecycle of of all those controls and the putting in production, but having having a
00:27:31:24 - 00:27:53:15Speaker 1tool set on which portfolio managers are in some cases even more technologists. I think we're all you know, we're all still working in the financial services industry, but everyone is is required to have more of a technological hat on, be able to be more facile and nimble with the underlying data itself. So that's that's a trend that we've seen.00:27:54:11 - 00:28:22:03Speaker 2Yeah. I think too that that exists with the asset owners too, just given the increase that we've seen with the co-investment opportunities for our asset owner clients. So I don't think that the process you describe, Mark, is unique to asset managers. I think a lot of are asset owners. Participants who are on this call kind of go through that same process in terms of them, especially for them, because it's pretty opportunistic to look at those co-investment structures.
00:28:23:14 - 00:28:48:18Speaker 2So having that same kind of rigor and kind of technologist viewpoint into where their opportunities exist is is not abating. Thanks, Jim. I was just thinking when Mark was talking about collecting all those sub ducks in a manual way, and it's December 3rd, ten years ago when I was writing an investor services team ad at a fund administration job for alternatives.
00:28:49:07 - 00:29:06:09Speaker 2The amount of mail we used to get at this time, just to try to tie out all of those sub dots and then the ones that on those sticky notes, you were missing one initial and you knew you needed to overnighted back to get that one initial to get those investors into the fund. It's amazing how far we have come.
00:29:06:09 - 00:29:19:10Speaker 2I know we have a long way to go with the continuous improvement things you guys are talking about. But even just eliminating the amount of paper that we had, even ten years ago, it's quite amazing at this point as well, especially on the hedge fund side.
00:29:20:28 - 00:29:30:11Speaker 1Yeah. As we as we as we eliminate the reams of paper where we're exponentially increasing the terabytes of data. So.
00:29:30:13 - 00:30:01:20Speaker 2Exactly, exactly. And we're changing from checking that somebody saying something to trying to analyze where all that data is coming from. And is that truly correct, to your point about becoming more of a technologist versus a checker? So that was great. Thanks. So, you know, we talked a lot about operational alpha, but another aspect of of DRI or a driver of alpha is the ability to quickly create hypotheticals in a lot of scenarios.
00:30:01:20 - 00:30:13:24Speaker 2And I talked a little bit about this as investors are reviewing deals. So General Tom, would you like to talk about some of the ways that quicker, more efficient data helps drive Alpha?
00:30:15:27 - 00:30:45:09Speaker 2I can start and Tom feel free to to jump in. But I you know, I think what we've seen in particularly in the investments that we've made in the launch of our Alpha for private markets platform, you know, the need for that has really been persona driven, right? And I think even as we were doing some of our due diligence, some of the CEOs at some of the shops that we spoke to, they were actually pulling for us because they said it's very difficult for us today.
00:30:46:06 - 00:31:15:12Speaker 2We have these point solutions for one subsegment of private markets. That doesn't necessarily translate as we expand into the to the other. So I think having that agility to look across not only the subsegments of private markets, but also across like what does the investor relations team need to see that is unique to the asset class versus what is monolithic across their private markets?
00:31:15:12 - 00:31:24:04Speaker 2Exposure is is really important. Tom, I don't know if you want to disagree or add to my comments there.
00:31:25:12 - 00:31:54:15Speaker 1I definitely don't want to disagree because it's it's it's completely it's it's the number one thing I hear in in any client meeting is all about scenario analysis. And I think it's really interesting. I mean, that tells you it's a problem. It also tells you that it's it's a fairly urgent problem that people want to solve. I think the interesting part of it is usually most companies we talk to their their approach to scenario analysis is show me the technology.
00:31:54:20 - 00:32:16:06Speaker 1It's a two part problem. It's a technology and it's a process. You cannot do effective scenario analysis on a portfolio without first having a strong data management. And in that, your data management is going to be a technology. You're going to have to have something in place for that, but you're also going to have to have a strong process around it.
00:32:16:17 - 00:32:27:02Speaker 1And and so I think exactly what you were just talking about, Jen, I would just I would just stress that it's probably the number one thing that we see. And it's it's pretty pervasive.
00:32:28:14 - 00:32:48:09Speaker 2And I don't think regulation for ESG is going to come over to the tap anytime soon to kind of standardize it in a way that that we think about. I think we're going to have to self-govern as an industry to kind of come up with, you know, what, what, what our table states versus like what, what is unique to the portfolio.
00:32:49:08 - 00:33:07:28Speaker 1Yeah. And I was just looking for the stat and I just found it because it wasn't in the survey that you just provided, it was in the larger survey that we were talking about. Almost 85% of the asset owners reported it would take longer than a week to run a scenario analysis across their portfolio. I mean, that's straight out of the survey.
00:33:07:28 - 00:33:24:04Speaker 1Right. So there. That's a nice quantification of the challenge right there. How much time and effort that takes, Mark? It speaks to what you were talking about earlier on on on something even smaller earlier in the process, right? Absolutely.
00:33:25:25 - 00:33:51:00Speaker 2So I don't see any questions yet in the Q&A. I just wanted to remind our participants, if you do have a question for our panelists, to type it into the Q&A, and we're happy to just chat about anything that's on your mind. But as we're waiting. We did talk about challenges, solutions, how we're driving Alpha. So maybe I know this chat was to talk about customization of data, so maybe.
00:33:51:00 - 00:34:14:21Speaker 2Jenna I'll, I'll ask you, how should asset managers and asset owners think about public and private data management? Yeah. So I think a lot of it is making sure you're understanding like what is that for? Right. So what, what Mark mentioned earlier, like what you need for dynamic trading strategy in a hedge fund, in a, in a public market view.
00:34:15:00 - 00:34:55:13Speaker 2Like how, how is that relevant and appropriate from a risk and exposure perspective in your private markets? Now, you can make the case potentially in a private credit portfolio, maybe they're very similar, but from a valuation perspective for real assets and infrastructure, I don't know that you need to have real time ticking for that. Now, there's definitely strides that the industry is making in terms of, you know, and I'm excited to bring technology to bear in the in those asset classes because I think what we'll be able to do from a liquidity perspective will be really interesting over time.
00:34:56:11 - 00:35:19:02Speaker 2We're not there yet. Yes, we're out of the mailrooms. But but I do think that you have to look at suitability of like what is it that you're trying to solve for from that public and private view? Like, yes, I want to see like where my cash is. Absolutely. Yes, I want to see that that my trading activity and exposure reporting.
00:35:19:28 - 00:35:48:04Speaker 2But when I look to go evaluate my performance, you know, it it'll be nice to do some comparables. But again, like you want to make sure that you're you're driving in, you're solving for something based on suitability as opposed to just saying we need to have everything all in one place, because those are very different business challenges in my mind.
00:35:48:12 - 00:36:11:03Speaker 2I agree. So it doesn't look like we have we do have any any other Q&A. So I'll I'll continue on with some of the questions that I have. So so, Tom, let's talk about the future of private markets. We know that investors are going to continue or we expect them to continue to allocate more money to the private assets.
00:36:11:12 - 00:36:22:28Speaker 2And we talked about better access to quality data and insights. What do you think about the future? If you had a crystal ball question, what would you say?
00:36:23:17 - 00:36:48:11Speaker 1Well, first, I would want to think about what what has more allocation mean in private markets. I think we said earlier the first shift is from public to private. It's about 25%, their portfolio at about 35%. That's a pretty sizable shift. And the survey, I think, showed that allocation is going to be to a variety of different asset classes through a variety of different channels.
00:36:48:29 - 00:37:15:18Speaker 1So what that tells me is no standardized, right? If you think about different asset classes, we use Mark Skyscraper example versus a wind farm versus a different real estate asset versus owning a retail sales company versus a winery. Right. All of these are potential private markets assets that are just different KPIs and you're not going to standardize that very simply.
00:37:15:18 - 00:37:43:03Speaker 1So I think the point is with investment and managing that data, we're going to start to see companies think about how they structure their organizations different. And probably the simplest example I have for that is to think about an accounting system. When you put an accounting system in place today, nobody thinks twice about it. It's it's necessary for keeping the books with it.
00:37:43:03 - 00:38:09:18Speaker 1You also have an infrastructure around it. You have entire functions that are dedicated to administering that system, to overseeing a closed process monthly and quarterly. In other words, to ensure the quality for an audit. Right. Within private markets, you have teams that are collecting data from portfolio companies, but there's no controller, there's no function that is dedicated to making sure that data has quality.
00:38:10:15 - 00:38:26:13Speaker 1And it's the same with any ESG process today. And so I think you're going to see investments in technology. You're already starting to see that. But I think you're also going to see teams start to shift their way of thinking about how they resource it in the same way that they resource other things like that.
00:38:28:06 - 00:38:56:13Speaker 2Yeah, I would just say spoiler alert, there is some information in the survey that points to this for our asset manager colleagues on the on the line here that asset owners as part of their due diligence are now requiring some level of scrutiny on data quality and data management prior to an allocation. So it's not acceptable to rely on, you know, what the control checks are.
00:38:56:22 - 00:39:25:16Speaker 2You know, you've got some real high caliber technologist person running some Python model in the sideline for the investment team that that is, you know, coming to the forefront more and more. Thanks, Jen, and thanks for sharing your insights on the future of credit markets. So before we wrap up, Mark, I just wanted to maybe get your crystal ball of future view from an asset manager perspective.
00:39:25:29 - 00:39:37:19Speaker 2What would you like to see for data insights from third parties such as fund administration, spend, administrators like C-suite to help you with this customization that your investors are looking for?
00:39:37:25 - 00:40:06:28Speaker 1Sure. So I I'm excited about the future. I think as as time goes on, the challenges get greater. But the toolset to deal with the challenges gets gets better, too. I know stage three is with with Nicholas is embarking on on fun insights a number of new tools that will really improve the clobbers, the collaboration and real time exchange of data information as we move forward.
00:40:06:28 - 00:41:00:04Speaker 1So some of that, some of those challenges we've had historically where information or portfolio positions are dumped by a fund administrator and to an Excel doc and reviewed and then sent over to the asset manager to review. And you know, this back and forth of Excel documents over, over email or other private exchange that that tends to will I think will fade over time and and move towards real, real online collaboration where teams from both both companies the asset manager and the fund administrator can be logging on to one system and annotating different holdings within the within a trial balance or a holdings report and either in either get it drilling down and having not
00:41:00:04 - 00:41:37:14Speaker 1only the data itself what are the positions but the metadata around that on yes I reviewed it and that that that signed off on you know that that that field or that that building or wind farm that will that sort of technology and tool will allow both both companies to get through more more information and less time and have I think that better quality controls because that just the sharing is is so much so much more fossil than than it used to be.
00:41:38:28 - 00:41:52:16Speaker 1So I mean, I think that's that's the basic the basic trend I see is, is more and more information, more more data, but better tools to slice and dice and drill down and then collaborate and share over time.
00:41:53:24 - 00:42:19:06Speaker 2Thanks, Mark. Yeah, we're moving from mailrooms to email to online collaboration, so definitely see, it's there moving especially from from where we send administration. So I didn't have anything else I wanted to ask you while I do want to thank you again for sharing your insights, we talked a lot about CCS recent survey and the customization of data.
00:42:20:28 - 00:42:46:03Speaker 2Can we just completed a white paper here at State Street on on that survey? So Ken, if you want to flip up to the screen, if anyone's interested in seeing that data, the link is available on our State Street website, which we're happy to have. You go in and take a look at the data and we're excited to continue this data management journey as.
00:42:46:03 - 00:42:46:25Speaker 2Part of Marianne.
00:42:46:25 - 00:42:49:08Speaker 1I just put that link into the chat for everybody.
00:42:50:00 - 00:43:15:24Speaker 2Great. Thanks, Ken. So we're excited about completing that, the survey, writing the White Paper, and we appreciate everyone's time joining us today. I don't see any other questions in the Q&A. I don't know before we close, if Jen, Tom, Mark, anyone had anything to say before I turn it over to Meg.
00:43:15:24 - 00:43:22:15Speaker 1Let's hope the future doesn't hold any Excel costumes any more.
00:43:22:15 - 00:43:50:20Speaker 2Exactly. Indeed. Yes. Well, I can't believe you ripped through that very fulsome agenda so quickly. I think that was excellent. And I think this is a huge topic, just unbelievably huge. The Times Clearly Are A-Changin as the song goes. And there's going to be a lot of work for all of you going forward. Very good for the industry that assets are moving into private markets.
00:43:50:20 - 00:44:11:25Speaker 2So that's good news for for all of our crowd here at Talking Hedge. And I want to thank all of you, Marianne and Jen and Mark and for joining us this morning and really giving us a glimpse into kind of the future, you know, of the importance of data. We all know that. But things really are changing very quickly.
00:44:11:25 - 00:44:35:15Speaker 2Data science is the thing. I know that I have daughters who are getting into the job market and that's all they want to do because that's really the future, I think of so many jobs. And the impact is going to be, I think, remarkably positive. So thank you, all of you, for participating today on the panel. Thank you all for for tuning in.
00:44:35:16 - 00:45:02:15Speaker 2Those of you who did and we will we will endeavor to get this video out to you if we can get consent from all the speakers. For those of you who missed it, and I hope you all have a lovely full it's still fall, almost winter, but enjoy. And as we head into the holidays, I hope you're all able to be with your loved ones and stay healthy and vigilant and just enjoy your weekend.
00:45:03:07 - 00:45:05:11Speaker 2Thank you so very much. It's very.
00:45:05:28 - 00:45:06:02Speaker 1Much.
00:45:07:12 - 00:45:08:13Speaker 2I.
Managers need to be more efficient at managing, analyzing and reporting the vast quantities of complex and unstructured data related to existing and prospective investments.
Improvements in these areas could be a significant driver of alpha, but more pressingly, asset owners are demanding an enhancement in data management. They need greater transparency on holdings, the investment process, costs and on sustainability criteria, placing tremendous strain on the existing reporting capabilities of many asset managers.
Listen to Marianne Oar, managing director, Private Markets product manager at State Street, discuss these data challenges at the Talking Hedge webinar with Mark Filstrup, head of Platform and Alternatives Architecture at AllianceBernstein, Jennifer Tribush, global head of Alternatives Product, State Street and Tom Vogt, vice president, Customer Success at Mercatus, as they discuss findings from our recent survey of 170 asset owners and managers in the private markets.