The Oregon State Treasury is opening a data warehouse early next year to help it keep better track of more than $50 billion in state pension assets and state investments.
Oregon is joining a growing list of pension funds turning to data warehousing, or data repositories, to gather and analyze investment data from both internal and external money managers that goes beyond information supplied by their custodians.
Oregon treasury officials say while they have no complaints about the type and quantity of information they receive from their custodian, State Street Bank, they can improve the usability of the data. The treasurer's office hopes a new data hub and portfolio management system - called Eagle PACE - will give them the ability to do just that. The Eagle system is expected to be operational early next year.
The data hub was selected by Oregon following a strategic investment systems review earlier this year by Boston-based InvestTech Systems Consulting, which was hired to evaluate the state's application and technology architecture.
InvestTech recommended the Eagle system, which gathers and consolidates data from the custodian each day, allowing the investment division to separate, analyze and "scrub" the data quicker and more effectively than by using raw data from State Street.
Eagle Investment Systems, Boston, is one of a few financial data warehouse systems for institutional investors. It was acquired last year by Mellon Financial Corp.
The investment division of the state treasury manages the investments of the $35 billion Oregon Public Employees Retirement Fund as well as the state's accident insurance fund, the local government investment pool. The treasurer's office manages about $7 billion to $8 billion in short-term assets internally.
Not robust enough
"All the data is available from the custodian but, as an example, PERS has approximately 60 external managers each with a separate account at State Street," said Sally Furze, controller in the Oregon state treasurer's office. She said reporting capabilities by the custodian bank "are not robust enough" to generate the type of information on holdings, transactions and income generation needed by PERS and other state agencies. Those agencies need more timely and detailed analysis than can be generated by custodial banks. "That's why we are going to a data warehouse," she said.
Other Eagle clients include the US$5.5 billion Ontario Public Service Employees Union Pension Trust, $28 billion Pennsylvania State Employees' Retirement System and the $12 billion Howard Hughes Medical Institute.
"You can get just about anything you need from your custodian bank, but it's not always in the most elegant fashion," said John Clark, consultant at Cutter Associates Inc., a Duxbury, Mass., consultant specializing in systems selection and evaluation for financial services industry.
Ms. Furze said portfolio data are available from State Street, "but if you download in any sizable amount ... the bandwidth is not sufficient. If you want more than one account at a time ... it just isn't efficient. Also, State Street organizes the information and reports by who manages the money, by the manager's name." That makes it more difficult to look at investments by style, strategy, cap size and other portfolio characteristics.
"When you look at PERS and you have multiple accounts, it becomes inconvenient and tedious to collect the information we wanted," she said. "With a data warehouse, we can collect State Street's data daily and make reporting easy and convenient. State Street can provide what we want, it's a question of how effectively."
A State Street spokeswoman said the bank does not comment on issues involving its clients.
InvestTech principal Bob Leaper said in the past few years large plan sponsors have used "parallel systems" to keep track of internally and externally managed assets, but the Oregon system might be part of a trend toward eliminating duplicate systems for portfolio accounting and reporting.