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4 Investment Performance Measurement Challenges and How to Meet Them
October 13, 2022 by Mark Elliott
Many investment managers have chosen to keep performance measurement and reporting activities inside their firm, closely linked to the investment decision-making process. But that entails dedicating a significant amount of time, money and staff to handle the following four critical performance measurement elements, each of which could derail results if poorly executed.
- Data Management: Setting up a robust process internally is costly and difficult to achieve. Data needs to be sourced, loaded and validated from multiple sources before results can even be calculated. Holdings and transaction data used to calculate accurate returns need to match accounting data, and return calculations should be able to account for different fee types and taxes.
- Validation: Additional time and effort are needed to make sure that the results are accurate before real analysis can even begin. Many firms struggle to make it this far and run out of time to provide value-added analysis. Often, validation of the results falls short, and inaccurate results are shared with both internal and external clients. As a result, the reputation of the performance measurement team suffers and the team is forced to be reactive to inquiries about the quality of the results.
- Analysis: Since so much of the effort is spent on getting the data right, there is often very little bandwidth available to provide quality analysis. Attribution insights, benchmark comparisons and risk analysis could be superficial. Limitations on the scope of analysis can also lead to lower job satisfaction of a performance analyst who would much prefer to be analyzing data instead of just calculating results. This leads to high turnover, which makes maintaining a good, robust process even more difficult.
- Reporting: Once the results are calculated, the performance team moves to prepare and distribute basic reports, an entirely new but critical part of the process. Without a way for end-consumers of performance results to run their own reports, a performance expert now needs to wear the hat of a reporting expert. And without self-service options, IT needs to get involved.
Investment managers can avoid data, calculation and reporting pitfalls while they increase their focus on performance analysis and attribution in partnership with a good managed services provider. Such a provider handles the performance measurement and reporting function, and the best ones offer tools to help performance measurement teams focus on analyzing returns.
Partnering with a firm like SS&C can dramatically improve any firm’s investment performance measurement and reporting process. SS&C has the people, operations and technology to automate data gathering and validation, quickly and accurately calculate performance results, and offer attribution and reporting tools so that a firm’s highly skilled performance analysts can focus on developing the insights that drive success.
Firms who work with us realize:
- Improved quality and timeliness of results.
- Higher satisfaction levels from internal and external clients.
- Reduced risk.
- Lower total cost of ownership.
- Decreased staff turnover and higher levels of job satisfaction.
If you would like to learn more about how SS&C can partner with you to advance your investment performance and reporting function, download our "Investment Performance and Reporting" brochure and contact us.
Written by Mark Elliott
Director & Head of Performance and Attribution Solutions, SS&C Institutional & Investment