By: Neill Reilly
When investing in alternatives, it’s hard to balance the need to provide timely reports to your investors or board with the need to report complete information.
When trying to accomplish this, investors face two primary issues:
- Lag in receipt of valuation/performance information: for investments in funds, the timing delay for the receipt of valuation information can be significant.
- Restatement: funds may restate their valuation and performance or may provide an estimate in the near term followed by a final set of data some months later.
SS&C GlobeOp has the answer.
Our solution is conceptually simple: book events (cash flows and valuations) in the period in which they apply, generate preliminary and final reports as they are needed, and track the differences and what caused them between each report version (i.e. produce a drift analysis that indicates what changed and its attribution impact at the investment level).
A drift analysis enables reporting to investors and the board even if managers are slow to deliver information. It also allows a single view for both accounting and performance information.
This approach requires a robust system that stores additional data and reports upon it effectively. It also requires a formal system that captures manager statements that contain information relevant to accounting and performance reporting. Data that is reported on manager statements for alternatives (e.g., format and the description used, gross vs. net reporting, etc.) can be inconsistent.
This approach has many benefits, including accurate matching of the financial event with the period in which it occurred and consistency of the accounting book of record and performance analysis. This provides users proper information upon which to base important asset allocation and manager selection decisions.
For more information, please download our whitepaper Improved accounting and performance reporting for alternatives or contact us 1.800.234.0556 or firstname.lastname@example.org.