Data cleanliness is unlikely to be top of the list of the typical CEO of an asset management company. It really ought to be, though.
- Your sales team relies on it
Whether this comes from a Bloomberg terminal, or looking at a ratings site such as Morningstar, data is the primary source of information for an investor when assessing funds. Having poor fund data—or worse, missing fund data—can hamper the efforts of even the best sales team. When they step into a meeting with an investor, it’s imperative that the asset manager’s fund(s) look exactly the way they should, given the limited bandwidth institutions have on making allocation decisions.
- No 5-star rating without it
Fund ratings are a crucial part of a fund’s marketing image as it gives an asset manager the edge against the competition. Ultimately, missing or inaccurate performance data sends out a bad brand message to investors. It also impacts ratings sites and other institutions in terms of their ability to accurately judge funds for awards. The analytics used for award and rating attribution depend upon the quality of the underlying data available to them. A NAV showing the same price for several weeks or that is artificially low because of missing data, incorrect TNA, or incorrect fee amounts, all impact the fund’s rating.
- Poor data quality generates a lot of unwanted noise
Clean data reduces the amount of noise. This allows the asset manager’s sales team to be proactive in terms of spending more time with an investor managing their portfolio, cross-selling and building the relationship with the investor, rather than being reactive, fielding enquiries and complaints from the client about incorrect or inconsistent data. The reduction of noise also applies to internal departments. Who’s got the correct data? Where’s the source of the correct data? That constant back and forth, trying to locate data and fix incorrect data, ends up becoming a cost centre and a sizeable distraction.
- Your reporting function depends on it
I many respects, the lines between data and reporting are blurring. Throughout the fund’s lifecycle, a series of data and reports have to be sent out, whether it is daily NAV dissemination, monthly investor reports, quarterly dividend reports, semi-annual reports, annual updates to PRIIP KIDs, Annex IV filings, AGM announcements. Whatever it might be, the corresponding data has to reflect those changes to ensure consistency of reporting. As such, having clean data sources can dramatically decrease the effort in producing the reports that depend on that data.
- It’s the sign of a healthy fund
Data is a core element in supporting a healthy fund: the cleaner it is, the easier the fund manager can operate. It is surprising how few asset managers know where their data comes from. They might respond, ‘It comes from the audit department’, when in fact the audit department is sourcing it from the administrator, who in turn receives it from the Transfer Agency. But one thing is certain. It’s only when one gets to the true source of the data that it can be cleansed and used to optimal effect.
- It creates confidence for investors
Let’s say a fund buyer is interested in a fund, sees the name of a portfolio manager that he likes, but then later finds out that he’s actually left the firm 6 months ago. Or in making portfolio selections, prepares to make a substantial buy at a management fee of 0.9% when for the past 3 months it has been at 1.3%. Worse yet, the buyer notices it on two platforms where he finds the conflicting values. At best, his confidence in that fund is eroded and at worse, ends in lost opportunities.
- It helps you get products to market faster
When an asset manager wants to distribute a new share class, there is often a huge imperative to get the fund to market as quickly as possible. Vendors are starting to impose strict validation steps before allowing any data onto their terminals, so it’s becoming increasingly important to work with clean, consistent data. In addition, clean data allows you to enhance business operational efficiency and to react faster to meet your compliance requirements.