One of the biggest public pension funds around is diving into the big data revolution.
CalSTRS says it has adopted cloud-based, data-mining technology that further automates its due diligence and analytic processes, all with the intent of more efficiently vetting and seizing on investment opportunities.
The decision to leverage data to streamline and better capitalize its nearly $184 billion portfolio puts the largest educator-only fund in the world at the forefront of an analytics trend in the administration of public funds.
A recent survey by Accenture suggests that public pension data is an untapped goldmine.
Its survey of 100 executives of national, state and local pension funds found that while most (87 percent) deploy some analytics tools, only 19 percent said they use data mining “a great deal.”
Almost all of the respondents said their current data platforms return value and are worth the effort and cost of deploying. The survey also found strong agreement on the use of analytics for specifically analyzing performance and risk, minimizing error and fraud, and complying with reform mandates.
Eight out of 10 respondents agreed that data analytics help provide appropriate investments for public plan beneficiaries.
“Every public retirement agency is required to maintain information about members in its system, which often amounts to decades worth of data,” said Owen Davies, head of Accenture’s North American public pension practice. “With nearly 20 million members, public pension managers are sitting on years of untapped data, a goldmine of information with the potential to yield insights and strengthen pension performance.”
Davies says the deployment of data-driven decision-making is particularly valuable to cash-strapped pension systems.
CalSTRS will use the Sterlinks platform, provided by Sterling Analytics, specifically in the $22.4 billion real estate portion of its portfolio.
“This will support our investment staff in navigating complex global real estate markets where access to the best local expertise and market data can be an advantage,” said Mike DiRe, CalSTRS director of real estate.