Investment Innovation – Brought to you by Franklin Templeton
Two of the United Kingdom’s largest pension funds have launched a guide to cyber risk for asset owners highlighting key cyber dangers asset owners should watch, and rules of engagement with investee companies and reticent asset managers.
David Villa, CIO of the $110 billion State of Wisconsin Investment Board is worried about the outlook for returns. As a result he’s significantly underweight sovereign bonds in favour of cash. But he’s also positioning the organisation to do better analytics for more complicated portfolios, another result of a low return environment. The fund is working on at least five data and technology projects and has hired a chief technology and operations officer.
Innovation is more important than ever given the uncertain and ambiguous times that lie ahead for institutional investors like climate change, political dysfunction and poor returns. “Returns can only come from an ecosystem that works and we need innovation to do this,” said Roger Urwin, global head of investment content, Willis Towers Watson speaking at the Fiduciary Investors Symposium at Cambridge University.
Last year, America Red Cross shut its investment office and handed over the keys of its $3 billion investment portfolio to Cambridge Associates. More pensions and endowments will do the same, argues new research from Cerulli Associates.
There are powerful forces changing the quantitative communities around the world. These include heavy competition in asset management, a desperate need to stand-out in an overcrowded field and readily available datasets and coding libraries.
The business of developing unique algorithms opens up opportunities for them to be seen as stand alone products that can be traded or shared, forming the basis of a value proposition.
