"One of the things we see across our organisation is that data management is becoming a much bigger priority and focus among asset managers," asserts Todd Moyer (pictured), Executive Vice President of Global Business Development, Confluence. "The complexities related both to institutional investor reporting and regulatory reporting are making data management a significant challenge. With Form-PF alone, managers might be looking at 30 to 35 different data sources across a dozen systems in order to meet the transparency requirements."
Confluence is a leader in data management and automation for the global asset management industry. To address the data management and regulatory reporting challenge – both for traditional and alternative fund managers – Confluence has just unveiled the Unity NXT" Regulatory Reporting platform.
"It's not the end reports that are the problem, it's more the ability to take data and turn it into knowledge; whether that's taking data from Confluence or external sources and being able to normalise that data for reuse across a variety of regulatory, financial and institutional reporting requirements. We will be using the platform for June 30th filings that some of our larger clients need to prepare for," says Moyer.
Before the financial crisis, hedge funds could get away with producing straightforward quarterly or annual reports for investors. Both managers and fund administrators used technology systems that weren't designed to cope with complex regulations.
"With the convergence of fund investment strategies, today's hedge fund managers are increasingly managing "mutual fund-like" products. Fund administrators are taking a hybrid approach to the opportunity by servicing multiple fund types, including mutual funds, UCITS, private equity and real estate funds. As a result, retail investors are expecting them to administer all of their funds with mutual fund-like efficiency, accuracy and reporting frequency," observes Moyer.
In his view, the fact that hedge funds increasingly resemble traditional mutual funds in the way they report and provide transparency to satisfy institutional investors is a trend that is likely to continue. "Institutional investors are demanding heightened levels of transparency into their hedge fund investments. They are requiring higher levels of operational efficiency and cost savings through outsourcing and back-office automation," adds Moyer.
Those managers running multiple versions of their strategy face a rising summit of data management and filing obligations. This can bring about altitude sickness if the right technology is not in place to handle different data sets and reporting formats, across different jurisdictions.
"If you look at what's being proposed with traditional '40 Act funds with SEC Modernisation, there is quite a bit of data re-use between the traditional and long-only world, but hedge funds were not originally set up to share data and re-use data across different jurisdictions and regulators," says Moyer. He thinks the burden will be placed firmly on the administrators and technology companies, "which sit in a strong position to help normalise large volumes of data for re-use".
"Our data hub is centred on the ability to take data in its native format without additional manipulation. That is going to be key because not only is it hard to source data, but then when you get it, being able to tag it in a reusable format will become increasingly important. We've positioned ourselves today such that we can support both administrators and fund managers directly, to help them deal with their day-to-day data management challenges," concludes Moyer.
