Investment Managers: Fill Your Stockings with Big Data and Real-Time Analytics

KPMG has today warned that investment managers must invest in big data and real-time analytics, or risk being caught short in 2015, as the firm predicts an increasingly volatile geopolitical landscape.

Tom Brown, global head of investment management at KPMG, said, “While geopolitical risk will always be in the fabric of investment management, it is the ability to manage and quickly respond to these developments that defines success.

“However as recent geopolitical developments such as the falling oil price and volatility in the Rouble suggest, risks are increasing in unprecedented variety, volume and velocity. Investment managers without the ability to analyse as well as make decisions in real-time, risk falling behind and therefore, impacting fund performance.”

KPMG’s economics practice has released five economic themes that investment managers should take note of next year:

●Volatile exchange rates
●Continued low crude oil prices
●Local conflicts from Isis and Ukraine, to the Eurozone
●Business innovation – potential emergence of breakthrough technologies
●Cheap money inflating asset bubbles

Yael Selfin, head of macroeconomics at KPMG, said, “The latest Fed announcement points at US interest rates rising in the second quarter of next year, which could trigger significant market volatility early in 2015, as investors hastily readjust their global holdings.”

Tom Brown adds, “January’s fund performance figures will reveal the industry’s winners and losers in terms those that have been able to respond to the spate geopolitical risks over the past quarter.

“Undoubtedly those who have been caught short will be reflecting on the quality of their data, modelling and ability to respond quickly. However it is equally important for those who have performed well not to be complacent. They must look at whether their existing data, systems and processes are able to cope with the increasing volatility.

“Successful investment managers will be those who invest in advanced big data and real-time analytics. This will not only help them make informed real-time decisions, but can also help with predictive analysis to maximise fund performance. Those who fail or are slow to embrace this technology risk being caught short and will potentially suffer poor fund performance.”