“Opening the Black Box” is our ongoing series on the data treatments, assumptions, and methodologies behind our analyses. In this series, we answer frequently asked questions on how we build, validate, and make decisions about our data.
Thoughts or feedback for us? We welcome it.
The strength of CEM’s data and insights lies in the databases we have built over three decades on self-reported data from institutional investors. Most of what flows into our benchmarking comes directly from our subscribers. However, as we noted in our previous blog, there are certain data extracts that CEM sources from third parties to help our subscribers, and in this blog, we explain what those are and why we source them.
Why we source data from third parties?
The primary reason we source data from third parties is to make it easier for our subscribers to submit their data accurately and on time. By receiving data fields directly from a recordkeeper or asset manager, we remove a step from your process to speed up your submission.
The secondary reason is to strengthen the research and analytics we deliver back to you. Public index returns data lets us build standardized benchmarks and risk model, which allow us to surface industry-wide trends and insights that inform your reporting.
What CEM sources today
For our core benchmarking databases, we source the following types of data from third parties.
US Defined Contribution recordkeeper data. For our US Defined Contribution benchmarking subscribers, CEM sources investment cost and performance data directly from recordkeepers. This is done on your behalf, at your direction. We only source this data with explicit subscriber permission.
US Defined Contribution target date asset mix, and option returns and benchmarks. For the same group of subscribers, we also source returns, benchmarks, and asset mix for popular target date options from publicly available fact sheets and market data providers, such as Morningstar, using option tickers or CUSIP numbers. This lets us pre-populate investment option data in your survey, which saves you time on the parts of the process that are the most repetitive and time-consuming. Unlike recordkeeper data, we source this independently, since it comes from public sources and is pre-populated for multiple subscribers, rather than on behalf of an individual subscriber.
Defined Benefit asset manager data. We also source data directly from asset managers on behalf of the Defined Benefit benchmarking subscribers through CEM Collect – a proprietary service that subscribers can avail in addition to benchmarking. For instance, in the UK, we source investment data from managers through the Cost Transparency Initiative, using CTI and ILPA templates. As with recordkeeper data, this is sourced directly from managers on your behalf, not independently.
Index return series. For defined benefit subscribers, we also source monthly and annual return series for relevant indices. This serves three purposes. First, it lets us pre-populate benchmark returns for major asset classes, again to streamline the more time-consuming parts of your survey. Second, it feeds CEM’s standardized private equity performance benchmark model, which allows for consistent net value added comparisons across peers. Third, it supports our risk modelling of policy portfolios, using standardized benchmarks for each asset class so that policy risk can be assessed independently and consistently across peers.
Research and analytics data. From time to time, we also source data independently from publicly available sources, such as industry associations and regulatory filings, for our research and analytics databases. This data does not feed into cost and performance benchmarking. However, where relevant, insights drawn from this research are shared with subscribers of our benchmarking products.
Speeding up your submission
If any of the above applies to your organization and you would like CEM to source data on your behalf to speed up your survey submission, reach out to us at production@explorecem.com and we will set the ball rolling.
Our committment to you
The trust our subscribers have placed in us over the years, many for close to a decade without interruption, is something we take seriously. This series is one way of honouring that trust. We are not here to simply explain ourselves. We are here to open a dialogue that pushes our work, and the industry, forward.
We look forward to hearing from you. If there is a question you would like us to address, please reach out to us at insights@explorecem.com.
This blog is part of our “Opening the Black Box” series. If you’d like to receive new posts in your inbox, please click here to subscribe.