DATA & ANALYTICS

The Data-Driven Investor: How Technology Changes the Game for

Today’s Asset Owners

Featuring highlights of the State Street 2013 Data and Analytics Survey Conducted by the Economist Intelligence Unit

DATA & ANALYTICS

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11%

18%

20%8% 8%

16%

19%

Diversified Asset Managers Traditional Asset ManagersAlternative Asset Managers OtherPension Funds InsurersBanks

About the Research

A global survey of more than 400 asset managers and institutional asset owners on investment data and analytics, conducted by the Economist Intelligence Unit on behalf of State Street (August and September 2013). More than 200 asset owners participated in the survey.

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

Respondents by Region Respondents by Type

34%

33%

33%

North America Europe Asia Pacific

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Five Trends That Will Stretch Asset Owners’ Data Systems

Advanced Data Capabilities Will be Key to Meeting Many of the Industry’s Most Pressing Challenges

Strategic Impact Data Challenge

New Operating Models Asset owners are insourcing more asset management

Front-office tools and infrastructure required to manage their own assets more effectively

Move to Multi-Asset Portfolios

Search for yield is driving more asset owners to embrace alternatives

Multi-asset class risk and performance analytics

New Approaches to Risk Management

New risk-oriented approaches to investment

New risk data on broader set of assets, combined with more sophisticated analytics

Changing Investment Styles

Major shift by pension funds toward liability-driven investment strategy

New tools and data required to understand and model future cash flows versus liabilities

Regulatory Evolution Massively increased reporting requirements as regulators adopt a “look-through” approach to risk

Flexible platforms that enable data to be collected, transformed and reported on across multiple regulatory regimes

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Asset Owners are Investing Heavily to Keep Pace

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

% Change In Investment into Data and Analytics Over Past Three Years

12%

71%

12%

3%

1%

Significantly increased our investment (>20%)

Slightly increased our investment (1-20%)

Made no change

Slightly decreased our investment (1-20%)

Significantly decreased our investment (>20%)

(Asset owner respondents only)

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Investment is Targeted at Front-Office Execution and Decision-Making Tools

• Front-office tools are an investment priority

• Spend on data and analytics will continue to grow

• Need to move closer to real-time information

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

How Investment Will Be Prioritized Across a Range of Data Tools

60%

36%

29%

25%

23%

27%

38%

44%

45%

40%

Order Management Systems /Execution Management Systems

Portfolio optimization

Performance analytics

Benchmark data

Risk analytics

Significant increase Slight increase

(Asset owner respondents only)

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Data and Analytics are Now a Firm Priority for Asset Owners …

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

Data is the Key to Addressing a Wide Range of Strategic Concerns

• 87 percent of institutional asset owners view data and analytics as a high strategic priority

• For 35 percent, data and analytics as the most important strategic priority

35%

52%

11%

2%

It is the most important strategic priority

It is a high strategic priority (near the top)

It is a mid-level strategic priority

It is a low-level strategic priority (near the bottom) or not at all a strategic priority

(Asset owner respondents only)

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An Industry Divided by Data

1. “Data Leaders” – Companies in the survey whose data and analytics are already a source of competitive advantage

2. “Data Laggards” – Have yet to gain full benefit from their data

Data is a competitive asset … But few know how to use it

• 63 percent of asset owners believe data will be a key source of competitive advantage in the future

• 83 percent increased investment in data infrastructure in the past three years

• Only 33 percent of asset owners are reaping the full benefits from their data and analytics capabilities today

• Our research reveals that a capability gap is opening up between data leaders and data laggards

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

Yet the Industry is Polarized by Its Approach

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% confident in capability

X• More likely to get distracted by the

complexity of data management

• Less likely to feel their data capabilities are keeping pace with the growth of their business

• Generating forward-looking insights from data

• Integrating risk and performance analytics

• Optimizing their electronic trading strategies

50%

33%

92%

7%

Data Leaders are Better Prepared for the Challenges Ahead

53%

50%

42%

64%

72%

70%

Leaders Laggards

(All respondents)Data leaders are more confident in ...

% agree with statementBy contrast, data laggards are …

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

(All respondents)

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63%

81%

Laggard

LeaderTools for regulatory compliance

Multi-asset class risk tools

Custom benchmarks/indices

% that view area as a strength (All respondents)

59%

70%

Laggard

Leader

38%

60%

Laggard

Leader

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

Data Leaders Have Smarter Tools for Managing Risk, Compliance and Performance

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Defining a New Service Model

Data You Can Trust Adaptable Systems Smarter Insights

Challenge • Accuracy of information is the top data challenge for asset owners (cited by 36 percent)

• Systems must adapt to support multiple geographies, asset classes and regulatory regimes

• Only 13 percent of asset owners have all of the talent they need to manage data effectively

Solution • Trusted data providers• Integrate data to achieve

“one version of the truth”

• Systems that support global reporting

• Integrated view on risk and performance

• New outsourcing models focused on insight as well as cost

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In Summary: How to Become a Data-Driven Investor

Integrate Your Data • Enterprise data warehouses help make information accessible and easier to analyze across the organization

Get Smarter on Risk • New technology can help provide a holistic view of risk across multi-asset portfolios

Manage Regulation • Asset owners need flexible reporting platforms to meet evolving regulatory demands across multiple jurisdictions

Accelerate Investment Decisions

• In a world where investment opportunities are fleeting, real-time data can help asset owners to act faster on their investment insights

Future-Proof Your Systems

• Asset owners need flexible systems that can support new asset classes, complex mandates and offshore assets

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This document is for marketing and/or informational purposes only, it does not take into account any investor's particular investment objectives, strategies or tax and legal status, nor does it purport to be comprehensive or intended to replace the exercise of a clients own careful independent review regarding any corresponding investment decision or review of our products and services prior to making any decision regarding their utilization. This does not constitute investment, legal, or tax advice and is not a solicitation to for products or services or intended to constitute any binding contractual arrangement or commitment by State Street and/or any subsidiary referenced herein to provide securities services. State Street hereby disclaims all liability, whether arising in contract, tort or otherwise, for any losses, liabilities, damages, expenses or costs arising, either direct or consequential, from or in connection with the use of this document and/or the information herein.

This document contains certain statements that may be deemed forward-looking statements, which are based on certain assumptions and analyses made in light of experience and perception of historical trends, current conditions, expected future developments and other factors believed appropriate in the circumstances.

© 2013 State Street Corporation CORP-0918