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Fidelity has chosen AssetQ

We are delighted to announce that, following its own market analysis, FIL Investment Management Limited (Fidelity) has chosen AssetQ as fund due diligence provider for its platform fund governance and oversight. Fidelity has been able to start using AssetQ instantly and is integrating the system into its current fund platform due diligence process for the many thousands of funds on its FundsNetwork and Fidelity platforms for advisers.

“We are very impressed with AssetQ’s expertise and approach to working together. The technical content which underpins its tool addresses the areas which matter most to platforms, which, combined with its business model and approach to service, set it apart from other propositions.”
Pav Khela – Head of Platform Partners and Vincent Davey – Head of Governance and Services at Fidelity International

“The depth of data and ease of access to critical information was key for Fidelity and their selection of AssetQ – re-affirming its position as the only viable solution for complete due diligence information across funds. Fidelity represent another key milestone in the adoption of AssetQ as a market standard for fund due diligence information.”
Amery Thomas – Markets Director at Sigmacity Ltd, the providers of AssetQ

“We spent valuable time with the RFP team at Fidelity to understand their existing due diligence process and data points. This has not only allowed us to demonstrate how AssetQ can streamline their operations, but also led to some key enhancements, valuable to both Fidelity and our broader client base. Engagement from Fidelity has been excellent throughout”
Richard Green – AssetQ Product Director.

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.

 

Raising the bar: Inside AssetQ’s due diligence database

Raising the bar: Inside AssetQ’s due diligence database

Raising the bar: Inside AssetQ’s due diligence database

 

The evidence is there that fund providers and fund selectors want a single platform for fund due diligence information.

All seem to agree the gathering of due diligence information, which is a key aspect of the fund selection and the ongoing investment checking process, is time consuming, inefficient, suffers time delays, incurs data gaps – often falling short of the markets needs and regulatory requirements.

Rather than submitting their own due diligence questionnaires (“DDQs”), some firms rely on the information that the fund manager provides as standard. This makes it almost impossible for these firms to undertake a thorough like-for-like comparison between funds, as the fund manager may be subjective and prone to show its’ funds in the best light.

Fund manager meetings are a key part of fund selection with an emphasis on investment due diligence.  Key operational aspects often get overlooked or the fund buyer has insufficient information to guide them with their questioning when meeting the manager.

For those firms submitting their own DDQs, they need to be sure that they have asked the right questions in an unambiguous way and in such a manner that they can get a comparative answer from all fund providers.

There is a growing realisation that there must be a better way to undertake complete and thorough due diligence, partially driven by MIFID and the regulator (reference to TR16/1), but also by internal compliance teams who see data gaps, inconsistent data collection and ambiguous questioning. Reference suspension of the Woodford fund.

Fund selectors may use due diligence questionnaires which have been compiled over time, and which cover some, but not all, the due diligence aspects they should, or rely on fund provider RFP documentation, leaving the fund buyer to pick through and interpret the information provided.

Fund providers say they generally receive a common set of due diligence questions, asking the same questions slightly differently, resulting in duplication of effort and interpretation of questions which are not always asked as concisely as they could be.

The incentive for fund providers to have one platform for due diligence is high. One platform to enter and update data makes complete sense. Providing instant up-to-date information in one location saves delays for clients and ensures there is a consistent level of transparency on opaque products.

The fund buyer wants an information standard, information presented in a consistent, validated format on all funds. Due diligence data without gaps, in sufficient depth – a single platform that enables true comparative analysis between products.

The market is sceptical that such a nirvana can be achieved yet the evidence shows otherwise.

Amery Thomas at AssetQ states “there are a few key building blocks that are needed if a due diligence standard can be established:

  • Is the market problem sufficient to drive change and do participants want to do something?
  • Will the market provide sufficient input / participation to clearly state what it wants?
  • Can all commercial barriers to the adoption of a standard be removed?
  • Have any legal / regulatory issues which may affect market uptake been identified and addressed?

Ultimately, does the adoption of the standard deliver value to all the participants, both the fund provider and the fund selector.”

AssetQ certainly fits the bill in meeting the above objectives and has established itself as the largest platform of its type globally.

AssetQ has benefited from the input of hundreds of market participants, from the largest financial institutions, to smallest participant, to create a “golden-source” of due diligence information, presented in a consistent format for all funds, avoiding data gaps (a key compliance requirement), and ensuring that the information is accurate and up to date.

AssetQ’s approach involves dynamic questionnaires that expand relevant areas of scrutiny in response to prior answers.  The structured nature of this information, in contrast to custom DDQs, allows for automation of alerting and comparative analysis.

Fund selectors can now go to a single source for all their fund due diligence information, saving time and effort in document management, data collation and analysis.

AssetQ has removed the commercial barriers for fund providers to enter and maintain their information for their clients to access, ensuring fund selectors can access in depth information from any fund provider, from the largest to smallest boutique firms.

AssetQ helps to even the playing field by providing the necessary information to all professional market participants and avoids discrimination based upon firm size or amount invested.

Will the market adopt such a standard? Only if it meets their needs and improves operational and research efficiencies. John Goodall, Head of Private Client Research at W.H Ireland says “Here at WH Ireland, we recognise that technology will play an important role in managing investment suitability. We recently commenced use of AssetQ to do the heavy lifting, as we look to improve efficiencies and have our resources focussed on the areas where they add most value”.  The fact that the platform is taking on new clients at an unprecedented rate suggests that the sentiment from WH Ireland and hundreds of other clients is in tune with the broader market

Thomas says “AssetQ operates an industry utility model whereby the market controls what AssetQ does and how it can best deliver a service to meet the needs of its members”. He goes on to say “AssetQ will continue to evolve in-line with the consensus market needs”.

Eric Dickinson, Independent Consultant

AssetQ is the largest repository of fund due diligence information for all domestic and international collectives.

AssetQ provides the leading semi-automated solution for suitability checks on client investments saving significant operational overhead and improving levels of regulatory compliance. AssetQ has the backing of the funds industry and opens up a flow of accurate, critical and key information from the fund provider to the fund buyer. This information is presented in a clear format enabling ease of comparative analysis.

https://www.linkedin.com/company/assetq/

https://www.assetq.com/

email:info@sigmacity.com

Phone: 01273 741777

Wisdom before the horse has bolted – the value of qualitative data

The mainstream news was quick to publicise the suspension of Woodford Equity Income fund yesterday following a significant redemption request from Kent County Council. News article here

While recent performance of the fund had been less than stellar, the signals that might indicate these suspensions are often qualitative factors or data points that are not available without direct inquiry with the fund manager. Even then, the structure and veracity of the data obtained is key to being able to provide consistent assessment of the underlying investment

This event underlines the strength of AssetQ. The platform’s ability to take numerous qualitative factors and specific data points and then combine these algorithmically into concise indicators is central to its due diligence capability. AssetQ can also alert on changes to these metrics as new data is made available, so any specific areas of concern are proactively highlighted to the users.

By illustration, below is a snapshot view of the AssetQ fund sheet that highlights the key data points that may have alerted users to the concerns on Woodford.

The derived key qualitative indicators are derived from various inter-related inputs from the fund manager and provide clear areas of concern that one might follow up with directly or use as a basis for diversification.

WH Ireland Streamlines Fund Due Diligence Process as part of Transformation Strategy

WH Ireland, the corporate brokerage and private client wealth manager, has implemented a state-of-the-art technology solution, to enhance and streamline its collective investment funds selection and due diligence process.

It recognises the need for technology to deliver the operational efficiencies needed to make discretionary investment management accessible and affordable to Financial Advisers and their clients.

WH Ireland identified the need to streamline the gathering of due diligence data and could see the role that a central repository would play by doing the heavy lifting.  It had observed the inconsistent approach to due diligence data and the benefits there would be of having a standard, and having the fund providers deliver the information needed at the click of a button.

The data repository provides a “golden-source” of comprehensive due diligence information available in a consistent standard format for all funds in the repository. The comprehensive set of questions and answers are a combination of input received from the many hundreds of firms using the repository. WH Ireland is one of the recent firms who will provide ongoing input to the repository and benefit from the input of the significant existing user community.

By using a field-based approach, the questions are posed in such a way as to avoid ambiguity in the answers provided by the fund managers. This approach also provides a straightforward like-for-like comparison of funds and eases analysis and integration to WH Ireland’s internal systems and processes.

The subscribers to the database know that all their questions are answered and will receive updates from the fund managers. “Access to information on all funds is key when it comes to adopting a standard for due diligence” said John Goodall, Head of Private Client Research at WH Ireland.  “A new fund can be added at the click of a button and the fund provider will then provide answers in a set format, easing fund analysis.”

The solution readily evidences that comprehensive due diligence has been undertaken which is more than sufficient to ensure that the needs of the end client are met and that the investment meets the suitability requirements of the FCA.

Goodall goes on to say “The implementation of this data repository forms part of our transformation strategy. It helps us to streamline the investment operations at WH Ireland, and enables us to quickly and efficiently undertake funds selection and due diligence.”

Amery Thomas at AssetQ, says “The “golden-source” data repository adopted by WH Ireland enables it to scale its business and ease the burden on Investment Managers by lowering the costs of making high-quality portfolios readily available to investors.”

 

Eric Dickinson, Independent Consultant

 

How asset managers can avoid being squashed by big data

How asset managers can avoid being squashed by big data

How asset managers can avoid being squashed by big data

By Eric Dickinson 

Fund providers’ tender teams are more than ever before being overburdened with requests for information and requests for proposal.

This highlights the ever-increasing need for available due diligence information, and for a central repository to hold the due diligence data, to enable instant assessments of funds and their firms.

Fund buyers are overwhelmed by the sheer volume of data that is presented to them by way of fact sheets, presentations, prospectus’ research and due diligence reports – all in different forms, therefore presenting information in an inconsistent manner.

Additionally, the information often highlights areas we already know about and answers questions in an ambiguous manner.  Comparisons become impossible to make.

In my last article for Wealth Manager, I discussed the benefits of an industry-standard ‘golden-source’ data repository of fund due diligence information, which included:

  • Information on all funds would be accessible it would answer questions raised in due diligence processes and collated by a broad spectrum of wealth managers and advisers
  • It would enable ease of comparison of different funds by presenting information in a consistent and unambiguous manner information would be maintained by fund managers and providers
  • Technology would do the ‘heavy lifting’, avoiding the need to manually collate the necessary information
  • A documented time-stamped audit would give proof of fund buyers having undertaken full due diligence on a fund prior to transaction

The above benefits lead to a more efficient industry, reducing costs for both fund buyers and fund providers, and, ultimately, reducing costs for the investor.

 The regulator’s desire to see better levels of understanding and transparency on opaque investment products is a further reminder of the need for easily accessible information that can be used as part of a full and thorough due diligence process.

An industry standard repository helps the market meet this need in a cost-effective and efficient way.

A technology-based repository can further improve on a process – where, historically, the issuing of bespoke RFP documents has been the modus operandi – by offering a hub of due diligence information that provides consistent data on funds across providers.

Volatile data alerts

Historically, due diligence has meant trawling through the small print of a lengthy prospectus, reviewing multi-page standard documentation from the fund providers, often leading to more questions than answers.

A lot of time is needed on one fund to fully understand how it operates and the risks it can take to achieve its performance. Having a better level of understanding also helps prepare for fund manager meetings.

 The due diligence data set includes both static data, that changes very rarely, and volatile data, which is often key data that affects risk and changes on a regular basis.

Therefore, the need exists for volatile data alerts, whereby the fund provider keeps the fund buyer updated on risks pertaining to volatile data as it changes – such as changes to fund liquidity and leverage, the fund management team or to whether the fund can borrow or go short on cash.

Automated alerts may be configured by fund buyers to notify them of key fund information changes, thereby avoiding missed updates from the provider that may prove critical. They could also keep the buyer informed of important changes affecting fund risk that are not provided as matter of course by the provider.

It is clear the industry needs to use a standard repository of fund due diligence data to ensure that due diligence can be cost-effective and efficiently undertaken.

Eric Dickinson is an independent consultant to the investment management industry.

How to get a complete funds due diligence process

The Wealthnet, 15/03/2019

Fund providers’ tender teams are, more than ever before, being overburdened with requests for information and requests for proposal (RFPs). This highlights the ever-increasing need for accessible due diligence information, and for a central repository to hold fund data, enabling instant assessments on the fund and the company providing the fund.

In a recent article, the benefits of an industry standard “golden-source” data repository were discussed. These benefits include having a repository answering the questions generally raised in a due diligence process, a database enabling ease of comparison of different funds, technology doing the ‘heavy lifting’, and documented date and time stamped audit evidencing that fund buyers have undertaken full due diligence.

The above benefits lead to a more efficient industry, reducing costs for both fund buyers and fund providers and ultimately reducing costs for the investor.

The regulator’s desire to see better levels of understanding and hence transparency on opaque investment products is a further reminder of the need for accessible information that can be used as part of a full and thorough due diligence process.  An industry standard repository helps the market meet this need in a cost effective and efficient way.

A technology-based repository can further improve on a process, where historically the issuing of bespoke RFP documents has been the modus operandi, by offering a hub of due diligence information that can provide consistent due diligence data on funds across providers.

Historically, due diligence has meant trawling through the small print of a lengthy prospectus, reviewing multi-page standard documentation from the fund providers, often leading to more questions than answers. A lot of time is needed on one fund to fully understand how it operates and the risks it can take to achieve its performance. Having a better level of understanding also helps prepare for fund manager meetings.

The due diligence data set includes both static data, that changes very rarely, and volatile data, often key data that affects risk and which changes on a frequent or regular basis. Therefore, the need exists for volatile data alerts,  whereby the fund provider keeps the fund buyer updated on the risk pertaining to volatile data as it changes.

Chloe Platts, senior paraplanner at Kirk Rice LLP said her firm recently implemented a data repository.

“At the touch of a button we can now access all the key and up to date information on a huge range of funds. This includes information not available from other sources, and it enables our discussions with the fund providers to be well informed and targeted, meaning that we can unambiguously have any concerns quickly addressed,” she said.

Automated alerts may be configured by the fund buyer to notify them of key fund information changes thereby avoiding missed updates from the fund provider that may prove critical, as well as being informed of important changes affecting fund risk and that are not provided as matter of course by the fund provider.

“Immediacy of change notification, particularly on important risk-based data often hidden under the covers, is vital for ongoing due diligence.  The alerts facility is a market first and a vital and efficient way of communication between the fund provider and fund buyer”, says Amery Thomas of funds rating service AssetQ.

It is clear that the industry needs to use a standard repository of fund due diligence data, to ensure that properly evidenced and complete due diligence can be cost effectively and efficiently undertaken.

Is a standard for Fund Due Diligence data needed?

How can fund selectors really carry out due diligence?

Is a standard for fund due diligence needed?

Do Wealth Managers Need A Standard For Fund Due Diligence Data?

Mifid ii has exposed huge holes in wealth due diligence

When you reflect on your funds due diligence process do you or your colleagues ever think – is our process robust? Do we ask all the right questions in the right way? Are they framed in a clear concise and unambiguous way? Are they complete and up to date? Are there things missing which I need to know about?

Or following a meeting with a fund manager – do we think that on reflection, did we get an answer to the question we actually asked?

If you do, then the chances are that you are not alone. Despite firms having existing due diligence processes, and close relationships with the fund managers, they recognise the need to significantly improve the levels of due diligence they perform.

Most firms have established processes for undertaking due diligence on funds they wish to include in their “house lists”, or in re-visiting funds that are already in use by their clients. They have established close relationships with Fund Managers, which involve both meeting the manager and issuing due diligence questionnaires or requests for proposal (“RFPs”).

Firms may rely on the information that the fund manager provides as standard, rather than answering a specific set of standard due diligence questions. This makes it almost impossible to undertake a thorough like-for-like comparison between funds, as the fund manager will have provided information that shows its’ funds in the best light. This can often also be true when ‘meeting the manager’ who may want to emphasise the strengths of their fund – often without immediate realisation by the recipient that that is what is happening.

There is a growing realisation that complete and thorough due diligence is needed, partially driven by MIFID and the regulator (reference to TR16/1), but also by internal compliance teams who see data gaps, inconsistent data collection and ambiguous questioning.

Fund managers want a standard but end up complying with their client requests answering the same questions phrased slightly differently in bespoke questionnaires leading to a delay in submitting replies, with much resource and effort used to complete bespoke questionnaires.

Further, how does the firm know that it has asked all the right questions in the right way to arrive at the right assessment of the fund?

In summary, bespoke due diligence questionnaires are inefficient, they are:

  • difficult to use when undertaking like for like comparison – the need for field-based analysis,
  • open to interpretation of general questions, inviting spin from the fund provider,
  • time consuming when completing RFPs, resource intensive for fund providers, causing delays for clients in receiving their information,
  • required to keep information up to date, information updates are generally infrequent and may be undertaken every six months or every year.
  • repetitive with bespoke questionnaires asking the same questions slightly differently

Amery Thomas. Markets Director at AssetQ says ‘There is an urgent need for a “golden-source” of comprehensive due diligence information available in a consistent standard format. This data needs to be defined by the fund buyer market, ensuring that it meets their needs and not the disclosure remit of the fund provider. This would streamline the task with the fund managers and ease the digestion of the data by the fund buyers.  The information needs to be available, in a timely manner, on any fund of interest to the fund buyer, in order that there is no unnecessary delay in obtaining the relevant information’.

Complete and accurate due diligence information augments suitability processes, fund selections and helps to better prepare for fund manager meetings – making for more informed conversations.

“An industry-wide initiative is taking place, using technology to do the heavy lifting, to gather all information and documents into a single portal.  The fund providers updating one portal makes sense, rather than servicing multiple similar information requests”, says Thomas at AssetQ.  Thomas goes on to say “the fund buyers get access to a more complete set of information, become alerted to key changes and can evidence a complete and thorough due diligence process. Information needs to be accurate and kept up to date, the current processes are inefficient”.

Will the market adopt such a standard? Only if it meets their needs and improves operational and research efficiencies. John Goodall, Head of Private Client Research at W.H Ireland says “Here at WH Ireland, we recognise that technology will play an important role in managing investment suitability. We recently commenced use of a data repository to do the heavy lifting, as we look to improve efficiencies and have our resources focussed on the areas where they add most value”.

Advisers should be worried about the latest FSCS decision on Harlequin

Professional Adviser quotes Informed Choice managing director Martin Bamford saying that advisers “should be quite worried” about the financial impact of any new claims. Lawyers representing Harlequin investors estimated the saga would cost the financial services industry £120m.

Chapters Financial chartered financial planner Keith Churchouse said: “It always comes down to … due diligence and experience, it is important advisers take the opportunity to do due diligence. It doesn’t matter what the investment is in, it has to stack up and be reviewed -that’s our job.”

As ever, AssetQ is here to help advisers review the investments they recommend. Please contact us to findout how AssetQ can help.

To read the full Professional Adviser article, select the link: https://www.professionaladviser.com/professional-adviser/news/3016755/advisers-should-be-worried-about-latest-fscs-decision-on-harlequin?im_edp=sigmacity.com&im_company=SIGMACITY

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