Why reporting is a nut you have to crack in investment management

How can you make it easier?

Reporting is an increasingly critical issue in the investment management sector, particularly given the still-evolving implications of the Australian Royal Commission. Whatever the requirements that emerge, it’s clear that investment management firms will need to pay heed to the Commission’s desire for the sector to improve the quality of information used for decision-making and reporting.

Achieving that is not easy, given the rapid change in our industry in recent years, with rapid asset-base growth and increasing complexity of underlying portfolios. In this environment investment managers need to be able to easily view and analyse a huge variety of variables such as exposure to markets, sectors, currencies, countries and regions. The aim, of course, is to mitigate risk and maximise returns – and that requires consistent, reliable reporting.

Investment management reporting generally falls into one of two categories:

  1. Internal daily reporting to individual teams, based on the daily data received from various feeds. It can take many forms – such as holdings by option or currency. Typically, internal reporting will give investment teams insights into areas such as exposure and risk, asset allocations and variances, cash management, and numerous other data points to help investment operations and to support investment decisions.
  2. External, quarterly reporting to the market is a more prescribed reporting format that’s based on regulatory requirements – in other words, what you’re required to disclose to the market on a quarterly basis. This applies to any fund that has members as stakeholders.

Consistent and reliable reporting is essential for investment managers, whether to drive internal decision-making, communicate to customers or fulfil regulatory requirements. And yet it’s often viewed as a difficult challenge to meet, and this is largely down to trying to effectively and efficiently aggregate multiple data sources. They need to be integrated to tie a data set together, and that’s not a simple process.

These holdings and trusts often contain many different entities, each of which has its own set of data associated with it. Bringing them all together in a way that can be disclosed to the market is a key reason why reporting is often so difficult in investment management. There are levels in what has to be disclosed publicly and what a fund may not necessarily want to disclose publicly, so it’s not just a matter of saying “here’s the data set, this is what we’re disclosing.”

Because there are a number of decisions that have to be made around external reporting, the process is also time-consuming. Wrangling all the data together into a format that can be reported out to the market often requires a significant outlay in terms of resources and time – time that’s better spent on high-value tasks and decision-making.

If an investment fund is having problems with reporting, they could face a number of consequences. Internally, if teams aren’t being provided with the best quality data, it could impact on their decision-making and ultimately, the funds they’re managing.

Externally, reporting problems could lead to compliance issues with governing bodies, such as the Financial Markets Authority (FMA) in New Zealand, or the Australian Prudential Regulation Authority (APRA). This comes in stark focus given the recent indications from bodies like APRA that they are going to get ‘’constructively tough’’ on breaches in data reporting, including penalties for organisations that fail to comply with their reporting obligations.

“Our reporting standards are legally binding,” said APRA Deputy Chair John Lonsdale earlier this month. “We will act when necessary to ensure institutions meet their obligations.”

So how can investment reporting be made easier? The key is having all available data at your fingertips and applying a solution that ties it all together.

Within AlphaCert, you can quickly and easily perform detailed risk and exposure analysis and reporting. It acts as a single source of truth to combine custodial data, market data and other sources of internal data.

Your data is classified and enriched with all the data points that allow you to drill into the areas where your risk and exposure might be. When you’ve got the rich data set all in one place, reporting becomes much easier and less time consuming. You can also configure any customised reports that your teams might need, as well as pulling together the data sets you need for external reporting.

Accurate reporting is increasingly crucial, both internally and externally. The difficulties associated with it, as well as the amount of time spent on it, can be significantly reduced with a solution that allows you to quickly and easily report on data from a single source of truth.

If you’d like to find out more about how AlphaCert can help you simplify the challenges of reporting in your business, contact us to schedule a personalised demo.

Scroll to Top