How Cognivo Implemented Investment Research with Advanced Analytics & an Interactive Dashboard Solution for a Leading Quant Hedge Fund
A U.S. based asseet manager with over $900 million in Assets Under Management (AUM).
New York, NY
The investment manager grew from 350 million in AUM to over $900 million in AUM over a three-year period. The growth came primarily from an increase in the number of investors and the addition of more asset classes to their investment strategy.
The investment manager was heavily reliant on Microsoft Excel to store huge amounts of data – from the front office, middle-back office, as well as third-party. The data included data sets related to portfolios, trades, cash, counterparties, collateral, accounting, and investor performance data. This data was used for analysis, summarization, and reporting purposes. Due to their rapid growth, the firm kept making incremental updates to the current system over the three-year period.
The investment manager’s data architecture and infrastructure were not keeping pace with the dynamic changes in the industry and the growth of the firm. The operations department was spending a large amount of their time cleaning, aggregating, and preparing data from multiple workbooks and other CSV files, that was then used to run VB macros to perform analysis and generate reports. In some instances, the macro was failing without warning or just hanging for long periods of time.
The CIO and the COO at the investment management firm explained the scenario in detail to the Cognivo team over a series of discovery calls and on-site meetings with operations and management. The Cognivo team decided to take a two-prong approach to the challenge at hand.
The first step was to understand the data architecture requirements looking 3-5 years into the future, based on the growth projections of the investment manager, as well as high-level insights into the trading strategies that might be utilized in the future.
To immediately alleviate the major pain points, Cognivo made the decision to refactor the current system and implement incremental updates to keep the system viable for the next 3-6 months.
During this period, Cognivo re-engineered the current data requirements, data dictionaries, application architecture, and other core requirements that supported multiple asset classes and currencies.
With extensive knowledge and expertise in the investment management industry, the Cognivo team was able to aggregate and centralize the firm’s internal data from the portfolio and accounting systems into a central data warehouse.
We then installed custom real-time business intelligence dashboards for the front office and back office teams to be able to view critical data at any time.
New York, NY
The new data warehouse and redesigned system met the client’s goals, as described in the Challenge. Cognivo’s extensive knowledge and experience in the investment management industry allowed for understanding of their current systems without any major documentation. The legacy applications and services were successfully re-engineered in a relatively short period of time.
Prior understanding of various types of trading strategies and knowledge of numerous asset classes allowed the Cognivo team to start small and perform rigorous testing and validation of the new reports against independently built Excel spreadsheets, as well as current reports being used in production.
Cognivo provided regular updates to the COO on a weekly basis, as well as when needed. The project was successfully completed in less time than initially anticipated, and under budget. The investment manager subsequently decided to retain Cognivo to manage their internal data on an ongoing basis. As a result, over time we have also made several feature enhancements to the new system, based on employee feedback.
What We Delivered
Automated, timely, accurate, and visually attractive investment research with advanced analytics and an interactive, visually attractive dashboard.
The automated aggregation and centralization of critical investment and operations data allowed the entire research and analysis process to be automated, predictable, timely and reliable.
The feature-rich investment research and analysis became available via web-based, centralized interactive dashboards to the investment officers, thereby eliminating the need to ask the investment team for manual analysis. The biggest achievement however was the accuracy of the analysis being generated, which improved by over 90 percent. In addition, Cognivo added various automated reconciliation checks on the input data as well as the generated analysis.
Unified views and role-based tailored dashboards.
The advanced analytics were made available via web-based, simple and easy-to-use, unified views and visually attractive interactive dashboards. These dashboards show near-real time data across asset classes, portfolios, markets, currencies, investment strategies, trading styles, and investors.
Highly efficient workload management.
The investment team no longer needs to gather data manually from various sources, and then spend countless hours preparing the data for analysis. According to the Chief Investment Officer, the biggest advantage of this new solution is that they can better utilize their small team of analysts, who are now able to use their time performing more meaningful tasks for the firm.
Exceptional return on investment (ROI).
According to the Chief Investment Officer, the many hours saved by automation of data aggregation, preparing and pre-processing, allowed at least two full-time roles to be dedicated to other higher value added functions within the firm. This equals close to a million dollars in savings over a five-year period.