Asset Managers Don’t Trust Performance Data

Over half (53%) of asset managers do not think that the data they receive on their investment performance is completely accurate, a survey by SimCorp found.

Eighty percent of asset managers say their portfolio managers do not receive investment performance numbers based on intra-day position calculations, and only 59% say their portfolio managers are able to look through to see the trades, prices, foreign exchange rates and classifications driving performance. Without accurate and timely information, portfolio managers may be making ill-informed trading decisions and be at a competitive disadvantage, SimCorp says.

The reason why asset managers do not trust their performance data is because they typically rely on disparate data feeds—one for order management, one for accounting and one for performance, Marc Mallet, vice president of product and managed services at SimCorp North America, tells PLANSPONSOR. “Data has to be shared and then reconciled at the end of the day,” he says. Instead, asset managers should be relying on one integrated platform, Mallet says.

What plan sponsors and advisers should learn from the survey is that “performance in and of itself isn’t the only reason to select a fund manager,” Mallet says. “They need to be concerned about service providers’ operational capabilities. Operational due diligence is becoming more prevalent. Plan advisers and plan sponsors should be taking a closer look at the systems and processes that support the investment process.

“The investment process should be seen as an opportunity, the differentiator which enables your firm to add value for your clients,” Mallet adds. “If performance data is not up-to-date, there is an inability to see what’s actually driving the performance. This casts a doubt on the accurate tracking of investments, which does not inspire investor confidence.”

There is a critical need for asset managers to have access to real-time and accurate performance data, and these survey numbers show a significant gap between the tools asset managers have available and what they require to make high-quality investment decisions, Mallet concludes.

Eighty-eight assets managers with $22.5 trillion in assets under management participated in the survey.