At garage sales, you will sometimes find a box or two filled with old records, audio cassette tapes, VHS and Betamax tapes, CDs and DVDs and other detritus left behind by the evolution of technology. In many cases, owners are tossing them out not because they don’t bring joy, but because they can now enjoy the same content more easily with new technologies, like streaming services.
Now imagine an industry that depends on easily and quickly accessing and comparing all of the content from those vinyl records, tapes and DVDs, but has not embraced the newer and easier to use technologies.
This is the nightmare pension funds, endowments, foundations and family offices face. That’s because hedge funds, private equity funds, mutual funds, REITs and many other investment vehicles provide information about their investments in many different formats. It’s the asset management version of the Tower of Babel.
What’s more, in the aftermath of the Financial Crisis, asset allocators understand that they need to be able to quickly determine, at any given time, the value of their investments. A quantitative approach has become much more important.
Among ALL of the institutional investors we meet with, there is growing frustration not just with the inconsistencies in data formats from fund managers but also the timing of communications and the difficulty in collecting data from multiple sources for different complex asset types. We regularly hear that LPs are receiving hundreds of reports from GPs within a two-week period at the end of the quarter, all of which include dozens of performance and cash flow metrics, but rarely the same ones. On top of that, these documents can come in the form of PDFs, Excel, PowerPoint, CSV, an online portal login and even the occasional Word document.
Many LPs have small operations teams and simply don’t have the bandwidth or resources to invest in data collection, aggregation and reconciliation without taking time away from managing their investments and allocations and vetting new ones.
The exorbitant amount of time spent on data wrangling isn’t just inconvenient, but it can hamper the investment process because it makes it impossible to analyze your portfolio in a timely and effective way, particularly across asset classes. That, in turn, handicaps nearly every other decision-making process an allocator faces, from how to react, or even prepare for market changes – such as a drop-in interest rates, a significant global event, a long-term fundamental market shift or any of a long list of factors.
Finding patterns in large data sets isn’t possible if you can’t compare apples to apples. CDs, DVDs, and VHS tapes will never be the same format. But when it comes to investment data, things are beginning to change.
We’re beginning to see a shift in the status quo as a growing number of LPs realize that they don’t have the time or resources to create, from scratch, the technological infrastructure to properly compare and study the disparate data sets in varying formats from their GPs, mutual funds and direct investments. At the same time, thanks to increasingly economical access to powerful data management tools, they have realized they don’t need to manually do this in-house anymore. LPs are now able to use powerful data management tools to collect, aggregate and analyze a wide range of data.
We’re pioneers on that front. Solovis is leveraging technology combined with a robust analyst services offering to give LPs a much faster, more accurate and complete picture of their investment portfolio.
As with other technology first movers, we’re beginning to see the virtuous circle of a network effect. As more LPs adopt our platform, we’re starting to see more interest from GPs who are willing to move toward reporting standards, ultimately leading to greater transparency in an easier-to-access format for LPs.
LPs are starting to leverage their influence with GPs to work toward more consistency across managers. When combined with our aggregation capabilities across public markets and direct investments, we’re able to provide a one-stop platform to collect and analyze all relevant data across a comprehensive, multi-asset class portfolio.
Managing a multi-asset class portfolio isn’t a garage sale – and the platform you use to manage your investment data shouldn’t be secondhand.