AUM per employee

Automation May Require More People

Here's  a quick jolt of provocative thought, just in case your brain - like mine - has become a little soft over these summer months: Talk of AI and various other forms of process automation have reached a fever pitch. With that phenomenon comes a flood of new intelligence - and also a heavy dose of mythology. Sometimes the difference between the two is not immediately obvious. The idea that automation has a tendency to kill jobs is one of those if-then statements that is rarely if ever questioned. In the world of trading, quantitative (aka - automated) strategies have earned a reputation for becoming incredibly successful with few employees, thereby supporting the prevailing wisdom. Well, it turns out that "quant shops" just might scale headcount relative to assets under management (AuM) differently than other managers with other trading strategies - and not in a way that is supported by prevailing wisdom... Alphacution just sent a completed draft of its first major asset manager study over to the editor. This [...]

By | 2018-03-20T16:39:30+00:00 August 24th, 2017|Alphacution Feed|

Operational Clues: Asset Managers Shifting Strategies

You can track shifting asset class and/or strategy allocations over several years for a long list of asset managers, and then add it all up to arrive at a data-driven industry trend. Easier said than done. This is an extremely heavy lift without the aid of a database that has already aggregated such information - if at all.  But, we think there is another way to generate such a signal that yields a similar conclusion (if you know how to read the tea leaves). Hint: As always, it still comes down to the people... That preamble aside for the moment, we will spare you the geek-speak and give you the cart before the horse: In the exhibit below, based on US Securities and Exchange Commission Form ADV data for 181 large asset managers (w/ AUM >$10 billion) over the 5 years ending March 2017, Alphacution's newest analytic - assets under management per employee, or AUM/e - indicates, upon calculation of total weighted average AUM/e for all reporting funds per period, that strategy trade durations have been lengthening. Translation: On average, asset [...]

By | 2018-02-28T16:31:46+00:00 June 28th, 2017|Alphacution Feed|

@GoldmanSachs: This Is What (Process) Innovation Looks Like

If you are only interested in reading hyperbole-laced stories about the latest shiny things in #fintech innovation, then what follows is not for you. But, if you actually care about innovation that results in real impacts, then we invite you to keep reading. From the following angle, something changed around mid-2012 at @GoldmanSachs. Arguably, the groundwork for such change was laid prior to that time, but the impact of that groundwork (at least to observers like us) didn't become noticeable until the end of Q2-2012 when a metric that we are starting to track much more closely began to break out. Here's the setup: In an article published on February 7, 2016 by MIT Technology Review, "As Goldman Embraces Automation, Even the Masters of the Universe Are Threatened," a key statement made by Marty Chavez, the company’s soon-to-be chief financial officer and former chief information officer, caught our eye: "Goldman has already mapped 146 distinct steps taken in any initial public offering of stock, and many are 'begging to be automated.'" Our [...]

By | 2018-02-28T16:33:49+00:00 February 16th, 2017|Alphacution Feed|