Introduction

Producing regular factsheets on fund composition and performance is a key task within asset management. Consistency, accuracy, quality and timely delivery are absolutely essential. Nevertheless, some investment firms still struggle with getting the basics right in their factsheet production: they are still focused on arduous manual inputting rather than opening up new, automated ways of communicating fund information to their clients.

There are a number of questions to consider when evaluating options for the production of fund factsheets. This blog analyses three of the most important.

Inhouse v vendor

Inhouse software systems for fund factsheet production are often expensive to maintain, difficult to adapt, and challenging to upkeep. Often, they are the result of years of custom development, making the asset manager heavily reliant on them and reluctant to replace them, even when better technology is available on the market. In many cases, firms or key stakeholders may not fully appreciate the opportunity cost of sticking with the status quo.

The alternative is to buy off-the-shelf software and ‘self-serve’. This is the vendor space, pure and simple, and one that has grown enormously in sophistication over the last 20 years. Although not ‘outsourcing’ in its strictest sense, some asset managers consider any solution that is not highly bespoke and self-developed as ‘outsourced’.

A specialist vendor such as Factbook is prepared for rapid delivery of the client’s requirements. Specialist vendors are already handling the asset management firm’s data and recognise that one of the asset manager’s major challenges is during the onboarding phase. Mandated reporting content, mandated reporting standards, and mandated reporting intervals are all meat and drink to best in class vendors.

Gains to the business of taking the vendor approach

When evaluating a new fund factsheet application, asset managers need to recognise if they are using a legacy inhouse system and consider this when setting their objectives. Ideally, firms should accurately determine where they are in the ‘legacy lifecycle,’ potentially getting little return from their system, running high operational and key personnel risks, and relying heavily on manual processing.

What, then, are the major business benefits of having a cutting-edge vendor system for fund factsheets? Here are six of the most critical advantages.

More consistent data

Inconsistent data may be simply caused by the fund factsheet software pointing at the wrong data. Instead of pointing at today’s data, maybe it is pointing at yesterday’s close information. This can be solved by having a centralised data repository, as stated above.

Fresher data

If a fund factsheet reporting cycle is extended due to operational inefficiencies (such as frequent manual checks), the data is decaying. Rather than getting it to the distributors and partners at T+5, the data may be arriving at T+25. With a faster, modern vendor approach, the data is fresher at the time it is received.

Rapidly adapting to serve client needs

An asset management business never stands still – it is always moving. What is needed for fund factsheets this year is likely to be different from what was required last year, and different from what is probably going to be needed next year. It is the job of the Reporting Manager to make sure that it can adapt to these changes. A vendor solution with variable patterns or templates will solve the problem.

Structured process

A structured, transparent operational process is a major benefit of a modern vendor system. Why is operational efficiency important? Well, the reason it’s important, aside from helping firms address the risk behind their poor operational steps, is that it also helps them to create process structure, process transparency, and mitigate key man dependency. That is a major win if you’re the manager of a reporting team.

Automated access to upstream data

With access to upstream systems via APIs, data used by the Investment Reporting team can be fully validated before it even reaches fund factsheet production. Much of the manual checking can be reduced or eliminated altogether in this way.

Consolidated system

Rather than relying on numerous systems, with different software solutions that handle different reporting elements like fund factsheets or monthly reports, a typical vendor approach will involve one system that does everything. In the former scenario the data isn’t necessarily being drawn from the same place and there are numerous silos, whereas with the latter, all data that will take part in reporting is kept in one place – a single source of the truth.

The importance of getting the data right

For fund factsheet reporting, the importance of getting the data right cannot be over-stated, but it is so fundamental that nor should it be over-laboured. Accurate and consistent data is the lifeblood of fund factsheet production.

Modern vendor solutions overcome this challenge by using their plug-ins and other tools to reach data as far upstream as possible and before users have the opportunity for manual interventions.

Factbook has achieved this for many clients by working with their securities services providers. Rather than taking the data from the asset manager, we take the data directly from Citi, MSCI, Northern Trust or wherever.

Conclusion

Workflow management is central to any automated factsheet production. Firms require a rigorous system that monitors and reports on all key aspects of the production process, from initial content retrieval through to final signoff and distribution. It is this system that ensures fund factsheets will be produced on time, every time, month after month. This is a key strength of our modern systems.

Only by adopting a fully automated system can firms expect to deliver increased efficiencies, be fully scalable and offer the ability to reduce both the costs and the operational, and potential reputational, risks inherent in manual procedures.

By Abbey Shasore, CEO, Factbook

@FactbookCompany