Losing Millions from Metadata Non-Management: Views from the World of Investment Management
Chito Jovellanos
President
forward look, inc.
March 7, 2007
10:00 AM - 11:00 AM
Level: Intermediate
Money managers and hedge funds not only make millions,
they also lose millions - but not just from bad bets. As shown by forward
look's recent experiences with these firms, 'metadata non-management'
results in significant opportunity costs and portfolio implementation
shortfalls. This session details these outcomes of sub-optimal data
management, and the actions that were, and could be taken to address
these information quality gaps.
Opportunity cost relates mainly to lost mandates. The majority of searches by institutional investors for money management services rely heavily on investment consultant's databases. Consequently, the quality of the information provided to those databases is vital to competing for and securing investment mandates.
Implementation shortfalls refer to the 'drag' on the investment performance of the model portfolio (eg., the inability to buy or sell securities at the expected prices and times). Order and trade management systems, sophisticated as they may seem, are only as effective as the underlying metadata their algorithmic engines rely on. In many instances, the lack of actionable metadata is a clear contributor to these implementation shortfalls that typically range from 1-8% of a portfolio's expected returns.
In addition to serving up novel perspectives on metadata use from a unique corner of the financial services industry, this session also offers novel insights into:
Opportunity cost relates mainly to lost mandates. The majority of searches by institutional investors for money management services rely heavily on investment consultant's databases. Consequently, the quality of the information provided to those databases is vital to competing for and securing investment mandates.
Implementation shortfalls refer to the 'drag' on the investment performance of the model portfolio (eg., the inability to buy or sell securities at the expected prices and times). Order and trade management systems, sophisticated as they may seem, are only as effective as the underlying metadata their algorithmic engines rely on. In many instances, the lack of actionable metadata is a clear contributor to these implementation shortfalls that typically range from 1-8% of a portfolio's expected returns.
In addition to serving up novel perspectives on metadata use from a unique corner of the financial services industry, this session also offers novel insights into:
- the stresses stemming from shifting business conditions on metadata design and infrastructure
- opportunities
for information and infrastructure providers to significantly upgrade
metadata usability.
Chito Jovellanos is the President of forward look, inc.,
a product development catalyst that helps market leaders in the global
securities industry envision and launch new products and services. Prior
to forward look, inc., he served as the Chief Information Officer of
ISI Emerging Markets (a Euromoney company). From 1994 to 1997, he was
Director of Research & Development at the Electronic Settlements Group
(now Omgeo) at Thomson Financial Services. Before joining Thomson, Chito
was Vice-President of Business Planning at ScotiaMcLeod, and helped
establish the Capital Market Group’s equity derivative operation. From
1985 to 1991, he served as Director of Product Development at Reuters'
Transaction Products Group.
Chito served as an advisor to the FAO on the development of new agricultural futures, and to the World Economic Forum on the impact of ECommerce in Asia. He is also a member of the FpML/ISDA Working Groups on derivative business processes and commodity trading.
Chito is a professional member of the Association for Computing Machinery (ACM), the Data Management Association (DAMA), the Institute of Electrical and Electronics Engineers (IEEE), and the International Association of Financial Engineers (IAFE). He is a Board Member of Troubadour Inc, a non-profit organization that promotes music and art education in under served elementary schools in the Boston area.
Chito served as an advisor to the FAO on the development of new agricultural futures, and to the World Economic Forum on the impact of ECommerce in Asia. He is also a member of the FpML/ISDA Working Groups on derivative business processes and commodity trading.
Chito is a professional member of the Association for Computing Machinery (ACM), the Data Management Association (DAMA), the Institute of Electrical and Electronics Engineers (IEEE), and the International Association of Financial Engineers (IAFE). He is a Board Member of Troubadour Inc, a non-profit organization that promotes music and art education in under served elementary schools in the Boston area.