The Challenges Faced by Investment Research Firms
Data Coverage, Timeliness, and Quality: The Top Concerns
The increasing reliance on data-driven investment strategies has brought significant challenges to the forefront. According to a recent Bloomberg Research Survey, data coverage, timeliness, and quality issues with historical data are the chief challenges faced by research analysts, quants, and data scientists.
The Survey: Investment Research Data Trends Survey 2024
The "Investment Research Data Trends Survey 2024" was based on data collected from a series of client workshops around the globe in 2024. Bloomberg organized eight in-person events in cities across North America, EMEA, and APAC. During these events, 166 clients participated in live surveys to share their insights on key trends and challenges in investment research.
The Challenges of Data Management
The challenge of not having adequate data coverage, timeliness, and quality could be the result of several factors, including poor data management practices, inadequate data governance, and a lack of proper data validation procedures.
The Importance of Data Normalization and Wrangling
The Bloomberg survey revealed that organizations are also struggling with normalizing and wrangling data from multiple data providers and identifying which datasets to evaluate and research.
The Constraints on Data Evaluation
These very challenges likely contribute to another key finding that nearly three-quarters (72%) of respondents can only evaluate a maximum of three datasets concurrently. In addition, nearly two-thirds (65%) require at least a month to assess just one dataset. This suggests severe constraints on the ability of these investment research firms to effectively use available data.
Managing Research Data: A Growing Concern
So, how are firms planning on tackling these challenges? The survey indicates that firms are still determining the best approach to managing research data. According to the survey, 50% of respondents said they currently manage data internally using proprietary solutions, while only 8% outsource to third-party providers. This suggests a strong preference for retaining control over their data management processes.
The Preference for Cloud-Based Data Storage
With more than six in ten (62%) of respondents preferring their research data to be made available in the cloud, it shows that there is a significant shift towards scalable and easily accessible data storage options.
The Need for Flexibility in Data Delivery Channels
More than one-third (35%) also want their data to be accessible through more traditional routes including on-premise, Secure File Transfer Protocol (SFTP), and REST API. This means that while investment research firms are comfortable with having their data on the cloud, they would also prefer to have flexibility in the choice of data delivery channels.
The Future of Investment Research: A Call to Action
From in-depth conversations with our research clients, it’s clear there is a desire for new orthogonal datasets as well as a need to harness ‘AI-ready’ data. The journey from data sourcing to extracting alpha is difficult and the continuous ingestion, cleaning, modeling, and testing of data is particularly challenging.
Conclusion
In conclusion, the challenges faced by investment research firms are multifaceted and complex. The need for comprehensive and flexible data solutions is undeniable. Bloomberg’s new data products directly address key challenges revealed in its survey of investment professionals.
FAQs
Q: What are the top challenges faced by investment research firms?
A: Data coverage, timeliness, and quality issues with historical data are the chief challenges faced by research analysts, quants, and data scientists.
Q: What is the preferred approach to managing research data?
A: 50% of respondents said they currently manage data internally using proprietary solutions, while only 8% outsource to third-party providers.
Q: What is the preferred data storage option?
A: More than six in ten (62%) of respondents prefer their research data to be made available in the cloud.
Q: What is the need for flexibility in data delivery channels?
A: More than one-third (35%) want their data to be accessible through more traditional routes including on-premise, Secure File Transfer Protocol (SFTP), and REST API.
