Are your funds likely to become suspended?

Fund suspensions are nothing new and unfortunately such incidents will continue to happen in the future.  Naturally when a fund does suspend, this can invalidate a whole client portfolio from a suitability perspective, leaving organisations liable for the advice they provide.

Remarkably access to the relevant information to spot an impending fund suspension has never been easier to obtain.  There is a realisation that quant analysis and asset allocation, the historic basis used by advisers when determining risk, is only part of the story.

The need for ready access to fund due diligence information has been recognised and is being addressed by making key, hard to get, information readily available, Paul Gaston from AssetQ  says “the adviser community is starting to cotton-on to the need for operational due diligence data”. The recent events at Woodford serve to emphasise the point.

The larger wealth firms and more sophisticated fund selectors use many data points to assess the health of a fund.  Here are some further key metrics one might consider when assessing a fund’s suitability.

  • The speed with which the fund holdings can be liquidated
  • The cash position of a fund, cash holdings, both long and short
  • Use of unlisted securities and the fund’s exposure
  • The fund inflows / outflows of investor money

“Though knowing the above information is absolutely necessary, being notified of changes to such key metrics is also essential to track ongoing fund suitability”.

The need for technology is no longer up for debate, particularly when there are a large number of fund holdings, “keeping track of change is practically impossible unless you can afford to employ hordes of people” says Gaston.

As of today, of the ‘000s of funds on the leading fund due diligence platform AssetQ, 34 funds have weekly liquidity of less than 15%, a further 58 funds have cash borrowings, 583 funds hold less than 5% cash, 293 funds hold unlisted securities, and 234 funds are permitted to hold more than 10% in unlisted securities.

Having ready access to key due diligence information is an area the regulator has identified to aid investment transparency, the emergence of market utilities, such as, AssetQ, offers evidence that the market is starting to act, to become better informed and kept abreast of change.

Eric Dickinson, Independent Consultant

Fund DD provider hires former Pictet salesman

Global Wealth Management People Moves June 2019

Fund DD provider hires former Pictet salesman

Former Pictet and Goldman salesman Paul Gaston has taken on the position of commercial director at AssetQ.

AssetQ, owned by SigMacity, is a depository of fund due diligence information. Mr Gaston will work with IFAs and investment managers to build the business.

Mr Gaston has over 30 years’ financial services experience, most recently he worked as a consultant for a French asset management company developing their UK infrastructure. He was formerly head of UK sales for Pictet and also held senior roles at Goldman Sachs and Fidelity.

Paul Gaston

Amery Thomas, director of SigMacity welcomed Mr Gaston.

“Paul brings with him a wealth of experience in financial services which will greatly help AssetQ provide a first-class service to our clients and the industry as a whole.”

SigMacity’s AssetQ is a semi-automated solution for suitability checks on client investments. It is designed to open up a flow of accurate, key information from the fund provider to the fund buyer, presented in a clear format enabling ease of comparative analysis.

Clients include Blackrock, Brooks MacDonald, Quilter and Rathbones.