UBS Asset Management Taps Alternative Data to Increase Alpha

Asset management firms are in the business of managing money on behalf of institutional clients -- typically pension funds and mutual funds.  They operate as investment advisors that purchase and sell financial instruments, with a fiduciary responsibility to generate the best possible returns for their clients.   To accomplish this, asset managers seek to “increase alpha”, meaning generating results that outperform market indices.  In today’s highly competitive investments markets, asset managers are increasingly turning to so-called "alternative data" sources to deliver superior returns to the institutions that entrust them with their financial assets.UBS was founded in 1862 in Switzerland.  The firm has operated under the UBS brand since the 1998 consolidation of Union Bank of Switzerland and Swiss Bank Corporation.  UBS, which is headquartered in Zurich and Basel, and is publicly traded on the Swiss and New York Stock Exchanges is one of the largest global asset management firms.  Thomas Heinzl is Chief Operating Officer for UBS Asset Management, and Suvrat Bansal is Chief Data Officer and Head of Innovation.  I spoke with Messrs. Heinzl and Bansal about how they are leveraging Big Data and Alternative Data to increase alpha for their clients. Heinzl and Bansal are operating in a new data-rich investment world, characterized by massive availability of data in traditional and new varieties and formats.  Massive availability dictates different ways and methodologies for managing and analyzing data. UBS Asset Management seeks to identify market and investment signals that are contextually relevant, and which will have a material impact on the performance of investments in a portfolio.  The focus is on long-term performance, and the sustainability of these asset’s performance.