Context Machine: Estimating Asset Manager Technology Spending

In this 48-page, 35-exhibit study, Alphacution goes to new lengths to apply the axiom that effective management requires effective measurement – and begins the process of supporting its hypothesis that there are persistent – and ultimately, predictable – relationships between trading and operational factors for asset managers. With most asset managers being private, support for this hypothesis also means that technology spending – a rarely observable data item in this universe – can be estimated with more readily observable and contextual data about AUM and employee headcount. Moreover, it turns out that by understanding the relative positioning of technology capital (via spending patterns) with that of human capital, we achieve an unprecedented and quantitative level of understanding about the underlying scope of automation embedded in that firm’s strategy selections. These findings ultimately give birth to Alphacution’s Asset Manager Ecosystem Map, and the deeper exploration into its structural alpha, active management, and passive management zones. The complete case study is available to premium and silver subscribers or via individual report purchase.