Essentia Analytics: Empowering Professional Investors through Data Analytics

All professional investors share a fundamental problem: they are selling skill, but getting paid for performance. However, performance is not a measure of skill—it’s a measure of outcome. “The fund management space is increasingly ‘survival of the fittest,’” says Clare Flynn Levy, Founder and CEO, Essentia Analytics. Assets are flowing into passive funds at a rate of knots because human managers are struggling to justify their fees through consistently superior performance. That is affecting margins and fuelling consolidation in the industry. But Essentia, a Notting Hill, London based company’s view is that it is possible for certain active fund managers to consistently outperform passive funds and net of fees. “The only way to do that is to focus on improving the investment process, honing investment skills and providing investors with proof of value added,” she adds.

In order to help fund managers improve performance, Essentia focuses on understanding the full context in which investment decisions are being made, and measures which aspects of the investment process add the most value. “Improving skill requires a data-driven feedback loop. That’s what Essentia is,” remarks Clare. The company offers a cloud-based software solution that uses behavioural data analytics to help professional investors make more skilled investme n t decisions. It enables fund managers to capture richer data about both their own behaviour and its context, turning trade, market and biometric data into actionable, personal insights. “The result is a simple, accurate, continuous feedback loop–the same sort that professional athletes use to achieve excellence,” she adds. “Like many industries, capital markets are rapidly exploring how they can derive value from big data analytics,” says Clare. For many years, capital markets have been building a wealth of rich, structured, quantifiable data about markets, customers, behaviors and trends.