Accuracy, availability and consistency of fund data could have a significant
impact on asset managers’ reputations, says Lee Godfrey of KNEIP
The core business of asset management firms should be to manage and grow their clients’ money. The key challenge therefore is to work on achieving the best performance possible over the long term, while managing risk and remaining transparent. Often, however, when discussing products with their buyer community (ie, investors, distributors, platforms and other fund selectors), sales managers often spend too much of this valuable time justifying data inaccuracies and/or reporting discrepancies. The buyer community notice data inconsistencies across data vendors or on asset managers’ web sites, which can lead to a loss of confidence in that manager’s brand.
Proactive fund data management
A recent survey by Fund Buyer Focus reveals that the most important element for asset managers’ credibility is the accuracy, availability and consistency of reporting and data. If fund data is not actively managed—which of course is time and resource consuming—it can very quickly become outdated and/or inaccurate.
Our detailed analysis shows that the average data consistency across the leading information channels is typically between 50 and 55 percent, and can be lower still. Notably, even companies that manage this data internally or through external service providers still fall within this range of inconsistency.
The effect on the asset manager and their brand can be significant, but is not always visible. We hear from clients when the burden on sales and operations teams is too high and the ‘noise’ from a dissatisfied buyer community becomes detrimental to growth. However, it is that hidden impact that can be more costly, through potential loss in sales due to a lack of credibility and trust from the market. In addition to these two elements, there is also the risk of sanctions or fines from regulators, and in extreme circumstances, litigation from the buyer community.
Asset managers that proactively manage their data see an increase in accuracy and consistency of their fund data to between 95 and 100 percent. By outsourcing this non-core function, they can also significantly reduce the cost of internal operations, and above all add substantial value through increased sales and improved credibility in the marketplace.
Quality control
Data quality and infrastructure require investment and focus, but should not be a discussion point between asset managers and their buyer community; it should just work, all the time. The only occasions where one should hear about it is from positive testimonials from buyers. As I recently heard at an awards ceremony, a certain asset manager “always provides clear, consistent and timely data”.
Each country where your funds are registered for sale will have specific regulatory requirements, and will require a certain amount of data to be published—from the net asset value to fees to tax to performance information—which all need to be managed proactively. However, channels that are not on asset managers’ preferred list of destinations will still acquire and publish their funds’ data from whatever source they can.
The problem then becomes that fund buyers may still use these channels when conducting their analyses and making buying decisions. Therefore, asset managers must not only actively monitor the channels that matter most to them, but also the other channels being used by the wider buyer community.
Whereas there are some data point that are more regularly requested than others, many of them will be used by buyers in different ways. Clearly, performance is important, as are fees, however, many other fields can be equally relevant. For cross-border funds, registration countries are essential for buyers to know where each fund may be distributed. Many advisors use tools that will filter on fields, and without this the fund will not even be presented to potential buyers.
Spot-checking is not enough
We do not sell data, hence there is no conflict of interest. The asset manager is our only client. This allows us to build long-term, mutually beneficial relationships with the data vendor platforms that matter to our clients.
We have invested significant time and resources working with each destination on data formats, scope, and frequency of delivery. We have implemented direct data feeds to all major channels for critical data. Spot-checking data sporadically is simply not enough. Data changes constantly, and this is part of the life of the asset manager. When we identify discrepancies, we follow up on each one to ensure that it is resolved in a timely fashion and report back to both the information channel and the asset manager on the result.
We open more than 500 tickets each month with each of the major information channels and close them within an average of two days. If dialogue is required to discuss conflicts such as fund classification, we broker calls between the portfolio manager and analysts on the channel side, saving sometimes months of email trails to find the right people and get to the heart of an issue.
