Atlanta - If you want a better money manager database, build it yourself. And that's what three former Watson Wyatt consultants claim to have done since leaving the company in 2000.
Designed by investment consultants for investment consultants, the eVestment Alliance manager database has impressed consultants and money managers in the short time it has been available.
Since its inception last June, the web-based database has attracted big-name clients such as Hewitt Investment Group, Lincolnshire, Ill.; Marquette Associates Inc. Chicago; Aon Investment Consulting, Tampa; Stratford Advisory Group Inc., Chicago; and Watson Wyatt Investment Consulting, Chicago.
Money management subscribers include Ark Asset Management Co, New York; Aronson + Partners, Philadelphia; INVESCO Inc., Atlanta; Lazard Asset Management, New York; Pilgrim Baxter & Associates, Wayne, Pa.; Strong Capital Management Inc., Menomonee Falls, Wis.; and LSV Asset Management, Chicago.
Because it is new, the eA manager database doesn't have the cachet of established databases such as CheckFree Investment Services', M-Search (formerly Mobius), Effron Enterprises' PSN or relative newcomer InvestorForce, but users claim it offers more depth, analytic features and is less complicated to use than existing manager search databases.
The data capture methodology and analytic features were developed by the former employees of Watson Wyatt's Atlanta office - consultants Jim Minnick and Heath Wilson, research analyst Matt Crisp - in conjunction with an alliance of consulting firms that provided input about the type of information required and standardization of the data format and collection.
"We've just come from the user side and were looking for something like this," said Mr. Minnick, principal of eVestment Alliance. "What we have developed satisfies the needs we had on that side of the business. We recognized the inefficiencies and problems we had in analyzing investment managers. We were users of the technology available at the time; we knew the systems that were available to consultants, and we knew they didn't meet all of our needs. We were looking for an opportunity to redefine data capture."
So Messrs. Minnick, Wilson and Crisp founded eVestment Alliance to develop the money manager database that had everything they had wanted as consultants. Other co-founders were Chris Paino, chief technology officer and formerly web developer at Bank of America, and Mr. Minnick's wife, Karen Minnick, chief financial officer and formerly vice president and national audit manager with Bank of America.
The business focuses on creating partnerships with leading money managers and consultants, "rather than competing with them," said Mr. Minnick.
The idea, he said, was to develop a database with enough detail that consultants would have most of the current manager information in standardized form without having to submit lengthy proposals to requests for information.
"We encountered questions in the marketplace. The perception was that data is a commodity and that database one, two and three are the same. For us, it was never like that," Mr. Minnick said. "It's like the 80/20 rule - it's that last 20% that we were trying to capture which makes the database more valuable."
The eA database has about 600 domestic and international money managers and 2,500 investment products. Managers submit and update their online information at least quarterly. Mr. Minnick said the database has been growing each quarter, and while it isn't as large numerically as other programs (M-Search, for example has 1,296 managers), he expects the number to continue to grow. Meanwhile, he said, the eVestment database "has excellent coverage in the universes our clients deal with."
"The size of the database is important up to a point," he said. "It's not how many but what type of information do you provide on the companies you are tracking. If we had 1,500 managers but one-half the information, it wouldn't be significant for what we are trying to do."
Mr. Minnick said the database "was built by people who use these systems" and "would have been a fantastic system for us to have when we were on that (consulting) side of the business."
"What they are doing makes a lot of sense by centralizing data collection," said David Gleit, associate at Aronson, which uses the eA database for competitive analysis. Mr. Gleit oversees data update activities for consultant databases.
"We looked at them all," he said. "With eA you get all the information and underlying data. All of them offer customization, but most don't meet our standards. A lot of them make it hard to get at the information you need.
"When I looked at what the others offered, I felt they (eA) offered more in terms of performance and analytics, portfolio characteristics ... mostly because of their templates, it cuts to the chase," Mr. Gleit said. As an example, he cited eA's excess return information, which is broken out by month, year to date and trailing one, three, five, seven and 10 years as well as the last five calendar years. Excess return data are available from other database providers, he said, but "these guys calculate it for you: they are one step ahead."
Depth of information
The eA database is "comparable" with established manager database services, but it has "a lot more information in terms of portfolio characteristics, asset types and product information," he said. "They (the founders of eVestment Alliance) come out of a good consulting shop. They were on the front lines of a consulting practice and understand the type of information required by consultants. It's a good database, and their business model is good."
Stratford Advisory subscribed to the eA database in January and uses it for manager screening and searches, said Brad Leak, consultant at Stratford. Mr. Leak said Stratford was one of the firms that provided input on the design of the platform.
"There are a few things that are not in some of the other databases, but it is generally in the way it is presented, such as dollars gained and lost in specific investment products and investment personnel for specific products gained and lost," said Mr. Leak. He described the eA manager screening as "stronger" than some of the larger data providers.
In addition to standard manager information, the eA database offers a detailed breakdown of client turnover statistics, fee information by investment type, turnover of investment professionals broken down by investment type, investment information by client type and asset information by account size. The database contains domestic and international sector allocations, country and currency allocations and returns both gross and net of fees and explainations of derivatives usage.
"Providing performance data and total assets aren't sufficient," Mr. Minnick said. "You need to break down the information into the criteria people employ in order to select a manager. It's not just assets but assets by client type, for example. We take it a step further, where the information is usable - not just how much is under management, but how much is under management for clients like me."