Data and Analytics

The Fundamentals of a Successful Database Strategy

Institutional investors and investment consultants are spoiled for choice when it comes to picking the next asset manager for a portfolio. To support their decision-making process, allocators rely heavily on databases to help pinpoint the managers who are best suited to meet their needs. Even before a formal search is announced, allocators and consultants conduct complex screens within databases and generate lists of managers and strategies that can be additive to their investment programs.

While database population may seem like an extra hoop to jump through or an ineffective use of resources for an asset manager, it is critical to capital-raising success within the institutional space. Before making any investment decision, investors use one or more databases to uniformly filter, compare, and analyze potential opportunities. This means that asset managers who forego a thoughtfully planned database strategy risk missing out on a significant segment of potential investors.

For asset managers, effective database population is a valuable “one-to-many” marketing tactic that means thousands of asset owners will have visibility into their strategies, many more than managers would otherwise have the resources to reach. There are five key database strategy fundamentals that asset managers must master to effectively facilitate engagement with institutional investors and their consultants:

1. High level of data completion

It might be tempting to provide just AUM and performance data when updating a database profile, but more than ever investors are looking beyond these headline metrics and want to drill deeper into the data.

The Nasdaq eVestment™ database features population scores for each asset manager profile based on how thoroughly it is completed. Managers with the highest population scores in Nasdaq eVestment received 16x more investor views than the least populated profiles and 4x more views than median profiles. Our consultant and asset owner partners recommend at least 80% completion with some allowances based on product type and asset class.

2. Submit historical data

Investors and consultants focus on more than just the most recent quarter of data when conducting due diligence. Since inception performance is required to warrant meaningful consideration from an allocator and it is recommended to have at least 3-5 years of quantitative historical data available.

3. Consistent & timely profile updates

The consistency and timeliness of an asset manager’s database updates are as important as the overall quality of the submissions.

Analysis of user activity on the Nasdaq eVestment platform finds that there is a spike in screening activity between 5 and 15 business days after a quarter-end. This means that asset managers who fail to provide data in this timeframe might be missing out on featuring in a significant percent of screens.

4. High level of accuracy

All managers prioritize accuracy in their reporting, but data entry errors do happen. As part of a complete database population strategy, asset managers should have systems and checks in place to flag potential inaccuracies. Flags that check for significant AUM, exposure, or performance swings can be an added layer of security that ensure managers are always reporting their data 100% accurately.

5. Tell a differentiated story with a well-written strategy narrative

For the 27,000+ strategies on the Nasdaq eVestment database, differentiation is key. A well-written strategy narrative and thorough qualitative details about your firm are just as important to investors and consultants as strong performance.

Qualitative questions have consistently been added to Nasdaq eVestment and other databases due to consultant and investor demands. In recent years, there has been a steady rise in interest in fee information, ESG, and DEI. These qualitative details can help an asset manager differentiate their firm from others by highlighting unique approaches to investing and risk management as well as a strong emphasis on good governance and business continuity.

Master your database strategy

For asset managers to be successful in attracting capital from institutional investors, they must master their database strategy and ensure that their strategies are well represented on all major databases.

The Nasdaq eVestment platform boasts over 1,200 investor clients who conduct over 150,000 manager screens annually. Nasdaq tracks all these screens, which yield over 600,000 annual product profile views and as a result we are acutely aware of what a successful and effective database profile looks like. 

Learn how McKinley Capital amplified their visibility with investors and consultants with Nasdaq eVestment.

Nasdaq eVestment for Asset Managers

Nasdaq

Nasdaq eVestment brings transparency and efficiency to the global institutional market, equipping managers, asset owners and consultants to make data-driven decisions, deploy their resources more productively and ultimately realize better outcomes.

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Russ Elliott

Nasdaq

Russell Elliott is Head of Asset Management Market Intelligence for Nasdaq eVestment.

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