Imagine your favorite professional sports team: They dedicate countless hours to reviewing game footage, analyzing plays, studying opponents’ tactics, and evaluating their performance. It’s a collaborative effort involving coaches, players, and support staff, all working together to dissect gameplay from multiple angles. Now, imagine bringing that level of meticulous playback data and analysis into the investment idea process …
Talent Development Starts with Data-Driven Insights
Advanced technology for performance analysis in pro sports is now table stakes. In the world of asset management, purpose-built analytics for idea performance is finally here. Idea Analytics Software [IAS] is a new category of investment management software that delivers in-depth analysis and attribution for all ideas – whether they make it into the portfolio or not.
IAS captures structured and semi-structured data from your existing idea generation process and combines this with the necessary external data to assess, evaluate and enable continuous improvement. This innovative platform provides unprecedented access to performance analysis of analyst investment idea recommendations.
Comprehensive attribution and analysis enables investors to evaluate ideas and decisions with precision. By aggregating, contextualizing, and overlaying data-points, investors can examine investment idea metrics across any given universe at any given time.
Gain New Perspectives: Pattern Recognition & Performance Building Habits
Watching back investment idea performance helps investors spot patterns in their investment decisions and process — revealing what went right, for who, why and when, and uncovering areas where analysts or teams consistently excel or need further coaching.
With IAS, Analysts and PMs can identify and codify areas for repeat success, right across the idea generation process. Think of it as supporting athletes to develop muscle memory through repeated practice, ensuring they can replicate their best performances consistently.
Analysts get access to a wealth of insight about their performance and an environment for learning and development, while Directors of Research (DoRs) and Portfolio Managers (PMs) get new levels of visibility into the value of ideas being generated. Viewing idea recommendations by allocation, conviction, sizing, selection, timing, and everything in between in just a few clicks, IAS can instantly deliver analysis on:
- Skill Assessment: How effective is an individual analyst’s or a pod’s skill in sizing versus selection and/or timing?
- Sector Weighting Impact: What was the impact of sector weighting decisions and how did over- or under-weighting themes or industries relative to a benchmark impact performance?
- Conviction Evaluation: How accurate is an analyst’s conviction and how does accuracy change in different market scenarios?
- Strategy Testing: How would a new strategy perform in specific time periods or actual market conditions and how would performance vary under different assumptions?
- Decision Bias: Is there any decision bias in selection or allocation?
The Power of Modern Idea Analytics in Talent Development Programs
It’s no secret that investment firms that prioritize professional development are well positioned to attract and retain top talent in today’s market. Those leveraging IAS are able to move beyond traditional, manual, and static scorecards and develop proactive and collaborative talent development frameworks.
“We have incorporated the IAS software into our daily workflows. These features have allowed us to monitor analyst opportunity sets and assist in our analyst development program. The interface is user friendly, and IAS makes it easy to extract valuable insights for our entire team.”
– Head of Research, NY-based hedge fund, $8B AUM
A recent Bloomberg article revealed the rapid rise of analyst development programs in the world’s largest firms in response to the industry’s seemingly ever-present talent war.
The article, entitled Hedge Fund Talent Schools Are Looking for the Perfect Trader, cites Steve Cohen’s Point72, Ken Griffin’s Citadel, and other giant hedge funds as going in a radical new direction for talent: in-house training programs.
Such internal talent development programs, like their sporting counterparts, require a focused and data-driven approach to performance evaluation and skill development. This is where IAS comes in – analysts, PMs, and DoRs can comprehensively review ‘game footage’ to assess the performance of all their investment ideas in a platform purpose-built to deliver immediate insights. A structured talent development strategy is now accessible to all funds, regardless of size and strategy.
Conclusion
Historically, idea evaluation tools have been lacking in the investment tech stack, leaving funds to rely on manual and siloed processes without the ability to accurately measure, analyze, and optimize decision-making. IAS changes that, delivering asset managers the insight they need to nurture and develop top talent– to hone analysts’ skills, to create performance-building habits, and to foster deeper, more collaborative performance evaluations.
To learn more or discuss how Lightkeeper IAS can support your analyst development program, get in touch here.
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About Lightkeeper
Lightkeeper provides data management, advanced analytics, and insights for investment managers to streamline, evaluate and enhance investment and business processes across the entire organization. Recognized as the industry leading portfolio intelligence and reporting platform, Lightkeeper serves 130+ clients representing $400bn in AUM.
Brian Martin is Managing Director of Data Solutions at Lightkeeper.