Essentia Analytics

Essentia Analytics

The Challenge

Active fund managers are under increasing pressure to prove their worth to investors and asset allocators, in light of cheaper alternatives. Margins are being squeezed, and alpha is scarce, especially in developed markets; there’s no longer a sustainable advantage to be had from better information or higher IQs. How can an active fund manager not only survive, but thrive, in this new phase of the industry’s existence?

The Solution

Just as data analytics has swept the field of athletics, it is going to transform the investment management industry. Essentia Analytics leverages the existing data set that every fund manager has – trades and holdings – applies behavioural data analytics designed specifically to identify and track decision-making skill. But what really makes us different is the way we then help the manager to put the insights to work, producing measurable skill improvement.

Essentia is a service – not a product: it’s part technology, part human. The technology does the maths and delivers tailored “Nudges” to the portfolio manager or analyst, but a human – a former portfolio manager in his or her own right – sits down with each client to discuss what the data is saying and what to do with the information.

Essentia is NOT about risk management or compliance. It’s about helping investment teams embed behavioural science into their own investment processes, to produce “behavioural alpha”: the excess return that comes from “knowing thyself”.

The Importance

Essentia has helped its clients produce, on average, and additional 60 bps of performance per annum through improved decision-making, created by Essentia Nudges. That is measurable ROI.

Investment management is waking up to a new reality. If your firm is grappling with what to do about it, ask yourself whether you have data that shows you exactly what your investment teams are good at and exactly what they’re not. Not just which PMs have performed well recently: past performance is not predictive of future performance. Essentia helps investment managers answer that fundamental question, so that they can spend their energy accordingly.

Every firm is sitting on a valuable data set of historical trades and holdings.

Next steps

Please contact Josh Tuddenham, our Business Development Manager, at [email protected] or on +447469768885 to learn more about Essentia and how it is helping some of the world’s largest investment managers improve performance with applied behavioural science.

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