Aon and eVestment to offer ODD data and research to institutional investors
Aon and eVestment have formed a strategic partnership to provide operational due diligence (ODD) research through the eVestment platform, recognising the need for more transparency and standardisation of ODD information.
The new ODD offering will initially be available for purchase to asset owners through the eVestment platform, which nearly 1,000 institutional investors in more than 40 countries rely on to source their asset managers.
The agreement comes at a time when transparency is even more critical given the novel coronavirus (Covid-19) pandemic and the growth of remote work arrangements. Institutional investors look for solutions to help them focus on their core business functions and save time. The comprehensive data set will relieve institutional investors of some of the administrative burdens of the ODD process.
The eVestment platform currently collects data from close to 9,000 managers and general partners on more than 43,000 traditional, hedge fund and private markets investment vehicles. As a future enhancement, the platform will include an ODD input portal so managers can report ODD data to Aon as part of their workflow when updating eVestment’s database. This will bring efficiencies to the data population process and enables ODD benchmarking and manager comparisons across a variety of operational factors.
“We are thrilled to bring more transparency around ODD to the institutional market,” says Gene Luciani, CEO of eVestment. “Operational due diligence has always been a critical process for asset owners and advisory firms. With the unprecedented circumstances of 2020, virtually all manager research is being conducted at a distance, making quality ODD data critical. The ability to access operational analysis from a top tier consultant within the industry’s leading institutional platform is a win for our clients and furthers our goal to continuously bring greater transparency to institutional investing.”
Aon has been at the forefront of ODD standardisation, streamlining an operational due diligence program to provide allocators with a data-driven approach to a historically qualitative discipline. “Operational due diligence as a discipline has really emerged over the past 10 to 15 years, with few standardised rules and regulations compared to other areas,” says Rian Akey, global head of operational risk solutions and analytics for Aon. “Aon’s operational risk IQ program was developed to help identify and quantify operational risks that may exist among investment managers and create a more consistent decision-making process.”
Whereas operational due diligence was once a pre-investment exercise, Aon is also seeing a shift to monitoring on an ongoing basis. Aon assesses between 170 and 260 different risk factors as part of a due diligence review, and the firm currently has about 400 managers in its operational risk IQ database with close to 800 investment strategies.
“More than ever before, we’re seeing that institutional investors want more information on the ODD process and want standardised, data-driven tools to improve their operational due diligence reviews and ongoing monitoring,” says Dave Testore, North American chief operating officer for Aon Investments USA Inc. “This new framework will give compliance and risk departments new ways of examining risks across managers and the potential to uncover emerging risks they were not able to examine in their traditional environment. We are looking forward to launching this important initiative with eVestment to bring standards, consistency and transparency to the ODD process for asset allocators.”