Technology and fund reporting

Technology plays so much a crucial part of how we conduct our business that it is often surprising how many of the old habits of the 1990s still remain.?I have written previously about how poor the onboarding systems are for such a large part of this business; when we have facial recognition for international travellers (Dubai) and the ability to pay for your metro tickets (Moscow), why do we still have to send so much paperwork around in original, apostilled, notarised.?What a hassle.?Actually, one interesting point that perhaps many of you don’t know is that every barrister has the ability (and equivalency) to a notary. So for all of you who struggle with a notary appointment, try your friendly barrister.?More of them around than… well, anyway.

Putting aside the inefficiencies of onboarding, one current and continuing annoyance is monthly fund performance reporting.?Yes, Trustnet and similar do a decent job of reporting statistics and rankings (even for those who do not subscribe to the service) but the continued use of pdf, fund performance reporting is painful and expensive (both to produce and maintain).?Producing commentary is always welcome but it is so static and pretty much unnecessary in the world of Twitter, LinkedIn, Medium and goodness knows how many other digital outlets there are for discussing the latest trends.?Old habits die hard.?

Such an approach is not particularly helpful.?

Investors are not static, post-opening animals who await their monthly performance reporting.?

Online, information consumers who may or may not follow every current investment theme but the onslaught of ideas for investing for the next big thing (or to not lose what one has made) moves at a pace faster than managers can communicate performance efficiently.?Why not more online factsheets with real-time performance monitoring??This is what Bloomberg does (and others), why should investors not benefit from something closer and more timely and more transparent.?Surely this is one of the advantages of technology to bring investors (and advisers) better information to serve their needs.?Transparency is a crucial aspect of fixed income investors (loan level data being an ECB requirement) why should equity investors be given less.?This goes beyond simple pie charts and a list of top 10 holdings in a UCITs fund; why not show the entire portfolio??There indeed some intellectual property in how securities are selected but at the end of the day, if a manager finds a hidden gem and no one else knows about it then the price by definition will not rise. This is what happens to equities which finally get the blessing of an “index inclusion”; volumes leap.?In an attempt to rationalise both resources and take advantage of technology has to offer, Orestes Sustainable Income?has launched amongst its first cohort of advisers a new “fund reporter”.

The Company uses technology to connect investors and advisers to the managers by providing a weekly update (at each NAV calculation).?The initial feedback from both advisers and investors is extremely positive with a click-through volume of traffic which has surprised all involved.?The interesting question will be how Orestes uses this information to communicate not only about its views of the market (bring in its social media feeds) but also whether this leads to better investor retention.?The advantage for advisers is obvious; clear communication with clients (who can be given access) and the ease which advisers can get updates for their clients.?A way to cross-sell future products; no doubt.?If it helps investor retention, saves time and money for all and improves the flow of information, then more fund managers should consider how to create similar solutions for their investors and advisers.

This article was first published in the FEIFA Members’ Magazine, April 2022