Is data analytics really disrupting the way traditional portfolio managers work? Confused about what I should do.

I am an economics undergrad student from Asia. I am interested in fund management and want to start my career in this industry. Recently I was reading that asset managers employ different investment strategies and quantitative strategies are some of them. However, I am finding more content online on the changing investment management industry since the rise of big data and how using it can help portfolio managers to break down information out there to make investment decisions even in strategies which are not quant focused.

Below are some sources which I looked at. I would love to know what people here think of these articles . Do you believe that data analytics will have a bigger role in asset management in future?

https://blogs.cfainstitute.org/investor/2018/02/0…

https://www.bloomberg.com/professional/blog/fund-…

https://www.ft.com/content/28d94422-3588-11e7-99bd-13beb0903fa3

I don't know how much of data analysis is done by research associates and what tools are used these days. I don't want to miss out on gaining any skill before entering the industry that's why I joined WSO and started looking out for working professionals in fund management industry. I am going to take CFA exams in future as well and will study for my masters in western world (thinking of USA or Canada at present). I thought of doing a masters in finance program next year after I graduate so that I can get education in USA. It would be easier for me to seek employment being a student in USA in comparison to being a foreign applicant as I would be applying for entry level jobs where I would compete with undergraduate students. Now I am confused between business analytics and combine it with CFA in future or simply pursue MS Finance. Would it be worth to study business analytics or I should stick to Finance grad programs. I am interested in equities fund management at mutual fund families like many others are. I have no preference for mutual fund companies. I am happy to work anywhere as long as the job involves making me think of new investment ideas and investing other people's money. I have many more questions but I would like o end here otherwise I would sidetrack from the main question. I have started reading books on investments as well. Recently I finished a book by Peter Lynch, but I don't know if professionals today still invest the way he did. Reality looks more complex.

I need help to create my career plan and need suggestions on things I should prioritize to be successful in investment career. I am tagging few users who have influenced me with their comments on this forum to create a profile. @Secyh62" @Vincent Adultman" @BlackHat" @West Coast rainmaker" @Kenny_Powers_CFA" @StaphyBone" @KarateBoy" @MJ Woods @Going Concern" @IlliniProgrammer" @Martinghoul" @thebrofessor" @Whatever1984" @BatemanBatemanBateman" @overpaid_overworked" @jankynoname" @Naoki Hanzawa"

Excuse my English please. I am still working on it.

 
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Firstly - flattered at the mention and I am happy to see that some of my past contributions have helped you and hopefully others. Always pay it forward.

Secondly the simple answer is yes. Without disclosing to much info about my firm (global, $300B+ in AUM) - we are investing SIGNIFICANT capital into building out our data analytics team. Data analytics provides an additional resource that our investment teams can use to make more educated decisions. 'Knowledge is power,' as they say.

My response below isn't geared towards "you should do this, not that," but instead - how I see data analytics being useful in the future.

Keep in mind there are still firms that operate mostly/strictly with a quant/algo mentality (AQR, D.E. Shaw, RenTech, Citadel). Blackrock has already announced a firm-wide shift from people to computers managing money. Think about it this way - up until 10 years ago or so the technology didn't even really exist for us to take MASSIVE amount of data (think every credit card transaction in the United States) and actually look at / analyze it. Hell, 10 years ago the data may not even have existed. Who knows where we will be in 10 years from now especially with constant improvements in computing power/etc.

Personally I think we're really just get started with seeing the impact that comp sci / data analytics will have on the markets. There has been a huge influx of demand for those with data/statistics/computer science background from financial firms. Especially considering the pressure from Silicon Valley (think AMZN, GOOG, SFDC, SNAP, etc) / tech companies taking talent away from the street.

Regarding the investment side - my firm (as well as others I assume) are trying to create a research process that employs BOTH the human aspect (deep sector knowledge) and the tech aspect (quantitative analysis, analyzing large data sets). I've also found this more commonly happening in the alternatives space (CLOs, Pvt Debt, Event Driven Funds, etc) than your traditional Large Cap Mutual Fund.

Friday morning, my brain is a little scattered so sorry if I jumped around on ideas. Hope this helps though!

 

I can't offer meaningful advice as far as making the jump as a foreign student, but the general background for most fundamental analysts is still finance. Learning some kind of programming language or skills via a minor, additional major, or on the side is probably helpful. Although I personally don't know/use any kind of programming language outside of excel professionally, I have seen it as a requirement/preference in job posts more and more. CFA/MBA would be the next steps, I don't know how useful an MS would be outside of it coming from MIT or Princeton as far as getting you in the door. I haven't seen many MS graduates out there in my travels/interactions.

As far as the growth of data analytics goes, I think that it will continue to garner a larger weight in the investment process, but I view it more as a tool rather than an end-all-be-all. I think the functions of PM/Analyst and Data Scientist/Developer will always be separated but with more knowledge of the latter being required of the former. Trading on purely on data has shown to have some disastrous results in the past (see LTCM). Models produce outputs that are often not binary and require interpretation. So I think data analytics will continue to grow and affect asset managers, but I don't see it as changing roles to the point where it would not be useful to study finance.

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