How did the idea for Calastone Data Services come about?
As the leading global funds transaction network, we are uniquely positioned to collate nominee level distribution data, worldwide, from multiple participants across the fund processing transaction chain. We saw the opportunity to leverage our network to build a product that provides fund managers with actionable insights of their own business and with the ability to compare performance with what’s happening in the wider market. This provides clients with greater intelligence to drive their product, sales and marketing strategies, using real market data, with greater immediacy of information than has traditionally been available.
So, how exactly does it work?
Calastone Data Services provides distribution management information (MI) across multiple business functions: Sales & Marketing, Regulation, Product Strategy and Market Research. First and foremost, it is a global distribution market intelligence tool that gives clients transparency of their distribution chain, all the way down to the end distributor level. There are three components to this, firstly the client view, which allows a client to have a global view of all their subscriptions and redemptions, in a single tool, split by asset class, country and distributor.
The second part is the market view, which allows clients to benchmark their performance against their peers, again by asset class, country and distributor.
The third part is the regulatory view, which has been designed to help clients meet MiFID II’s Product Governance and Target Market requirements.
Laura Mann, Product Manager, Calastone Data Services
What insights into global distribution will clients gain by using Data Services?
The headline objective of the product is to provide the asset management community with global sales information and analysis that does not exist in the marketplace today and, therefore, offering more expedient insights.
Comparative and qualitative fund distribution data can be used for business intelligence purposes – i.e. identifying which products are selling well and to whom throughout the various parts of the distribution chain. The data can also be aggregated, providing an overview of the client’s business against the market, including their top and bottom performing share classes and distributors, market share and a flow ratio so they can quickly judge if their flows are behaving in a similar way to the wider fund universe. A client may have good sales in a sector, but if the rest of the market has outstanding results, they will want to know and see how they can adapt their strategy to improve.
Fund managers can also view market analytics in sectors and regions where they do not have a product but may be thinking about introducing one. The market view enables an understanding of the distribution landscape, a fund manager can compare flows by different metrics and measures, including reviewing the types of assets favoured by geography or certain types of distributor, thus allowing them to ascertain if there is a demand that they could fulfil with their fund(s).
How can fund managers use these insights to improve the management of their businesses?
The winners in tomorrow’s asset management industry will be those who are most proficient in collecting, analysing and responding to this type of information, adjusting their product development and distribution strategies to address investors’ real-time needs and preferences. In today’s increasingly competitive environment, unique value propositions that are gleaned from data will give the fund managers a competitive edge over their peers and support their business goals.
This allows clients to gain powerful insights into the markets in which they operate, helping to support sales distribution and product development strategies. As a result, fund managers save time, cost and resources.
How does this product help fulfil their regulatory obligations, for example in relation to Target Market and Product Governance (under MiFID II)?
Many fund managers currently have a limited view and understanding of their global distribution beyond nominee level on the main register. However, under MiFID II’s Product Governance and Target Market regulation, fund managers must understand the appropriateness of their products (i.e. whether the fund is appropriate for the client, taking their knowledge and experience into account) and look through the distribution chain to ensure, for example that unsophisticated execution only retail clients have not bought units in complex investment vehicles. The scope and volume of work required to navigate the distribution chain, to achieve transparency of their distribution model, is significant and can involve consolidating data across potentially thousands of administrators, distributors and advisors.
Calastone Data Services helps to provide the data relating to the flow of such information, taking transaction data from distributors and providing a single, holistic view to the fund manager detailing where the end distributor has sold their products, making it easy to identify proportionately where issues exist on a distributor by distributor and fund by fund basis.
What does Calastone Data Services mean for the funds industry as a whole?
Calastone considers data to almost be an asset class itself, as it has the potential to deliver results in the form of consumer insights that can drive real business returns. In fact, our global fund transaction network essentially represents a case study in how real-time fund flow data can generate actionable market insights. For example, we looked at Calastone transactional data to examine the impact to fund flows following the Brexit referendum in June 2016, and could identify trends in behaviour and the key differences in the UK compared to Asia. This type of insight into the behaviour of clients enables fund managers to tailor and target their products in response to the demands in a particular region at a particular time. It is crucial that firms understand the behaviours of their clients if they are to gain competitiveness.
As we continue to work with our clients to build out our Data Services solution, the opportunities for them to expand their insight into their distribution will grow even further.
Where can people get more information about this and other Calastone products?
Please visit https://www.calastone.com/solutions/ for more information.