A comprehensive global study, "The Crowded Trade", commissioned by Clearwater Analytics, which surveyed 250 senior executives at fund managers across the U.S, Europe and the Asia-Pacific region, reveals that traditional, static asset allocation reporting is being abandoned as investors demand greater granularity and transparency about the portfolios.
Investors are no longer prepared to accept static PDF reports and demand more tailored and interactive reporting. The study shows that managers have risen to the challenge as nine out of 10 (90%) said they were effective at providing this to clients.
Clients also demand greater transparency of ESG (environmental, social and governance) factors, requiring asset managers to report sustainability metrics alongside financial performance. More than three-quarters (76%) of those surveyed said this has been relatively easy for them to achieve, while 24% said it was neither easy nor difficult.
Portfolios have, in recent years, become more diversified with growing exposure to both traditional and private asset markets. This has increased the complexity of reports, with more clients seeking a single integrated view. However, more than three quarters (76%) said this had been relatively easy for them to achieve for their clients (12% said it was very easy).
Technology is clearly an underlying factor. New systems give clients the ability to interact directly with the data provided by their managers. This has transformed fund manager reporting into a two-way conversation with clients and more than seven in 10 (71%) expect this trend to continue to develop over the next two years (4% expect it to increase dramatically).
Clients benefit in other ways as well. Systems that deliver more insightful, detailed reports have freed up time for relationship managers and allowed them to improve overall client service. This has resulted in more mandate wins, the study showed. Seven out of 10 (70%) asset managers said this has been very important to their recent growth (30% said very important).
Chris Sturhahn, Head of Product, Asset Management at Clearwater Analytics, said: “Client reporting used to mark the end of a quarter. Today it is where a client forms a view of the whole firm, and the asset managers in this survey say it is working in their favour. That raises a larger
question for the industry, which is whether the investment record behind every client view is one record or several. A report is only as steady as the facts it stands on.
“Taken together, the findings show that reporting has become part of how asset managers win and keep mandates. When clients can interact with the data themselves, every report becomes a conversation, and relationship managers with more time for service make that conversation count.
“With most firms rating themselves effective, effective reporting is becoming the baseline, and clients will judge managers on how much they can do with the data and how consistent it is in every view. Interactive reporting invites scrutiny, and scrutiny rewards the firm with one version of the truth.”
The full findings of the “The Crowded Trade” study are available at https://cwan.com/resources/reports/the-crowded-trade-global-asset-manager-report/
