A comprehensive global study, “The Crowded Trade”, commissioned by Clearwater Analytics, which surveyed 250 senior executives at fund management firms across the US, Europe and the Asia-Pacific region, reveals that traditional, static asset allocation reporting is being phased out as investors demand greater detail and transparency regarding the portfolios.
Investors are no longer willing to accept static PDF reports and are demanding more personalised and interactive reporting. The study shows that managers have risen to the challenge, with nine out of ten (90 per cent) stating that they are effective at providing this to clients.
Clients are also demanding greater transparency regarding 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 had been relatively easy for them to achieve, whilst 24% said it was neither easy nor difficult.
In recent years, portfolios have 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 per cent) said this had been relatively easy for them to achieve for their clients (12 per cent said it was very easy).
Technology is clearly a key factor. New systems enable clients to interact directly with the data provided by their fund managers. This has transformed fund manager reporting into a two-way dialogue with clients, and more than seven in ten (71 per cent) expect this trend to continue to develop over the next two years (4 per cent expect it to increase dramatically).
Clients benefit in other ways as well. Systems that provide more insightful, detailed reports have freed up time for relationship managers and enabled them to improve overall client service. The study showed that this has led to more new mandates being secured. Seven out of 10 (70 per cent) asset managers said this had been very important to their recent growth (30 per cent said it was 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 an opinion of the firm as a whole, and the asset managers in this survey say it is working in their favour. That raises a broader
question for the industry, namely whether the investment track record underlying every client’s view consists of a single record or several. A report is only as robust as the facts on which it is based.
“Taken together, the findings show that reporting has become integral to how asset managers win and retain mandates. When clients can interact with the data themselves, every report becomes a conversation, and relationship managers with more time to devote to client service ensure that conversation makes a difference.
“With most firms rating themselves as 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 across every view. Interactive reporting invites scrutiny, and scrutiny rewards the firm with a single 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/
