“Reporting” is a broad term often used to mean many different things in the buy-side industry. There are three dimensions to consider to understand the type of reporting:
Data collection & aggregation
Before we can create a report, the underlying data needs to be prepared. Preparing data for reporting is not as simple as it sounds (see concrete challenges listed below in this article). At Limina, we strongly recommend selecting an Investment Management System (IMS) with:
- Built-in reporting capabilities (ideally customisable; see more under features in the next section). You might as well report directly from the IMS, because you need all/most data in the IMS anyway. Assuming the IMS has good reporting capabilities (usually not the case). Limina is an IMS with built-in reporting capabilities.
- An IMS with generation-3 (“live extract”) Investment Book Of Record (IBOR) capabilities. This means being able to show portfolios under any assumption. One report might be on the NAV time series, while another might be on adjustments made after NAV is struck. A live-extract IBOR makes creating both of these reports (and many more) simple. To our knowledge, only two vendors offer this, and Limina is one. Book a demo with our technical team to see how it works.
- A user-configurable engine to get data into the software. So you can always import any data you want, e.g., from custodians, GPs, index providers, market data providers, etc.
A video of Limina’s import/export engine:
Features of investment reporting tools (incl. customisation)
Once the data for the report is in order, the investment management reporting software usually consists of two layers:
1. Preparing the data
Pre-processing usually involves transforming the data we want to report on into some kind of table format:
- A flat table or a pivot table
- Grouping functionality on pivot tables includes:
- Any number of layers
- Group on buckets/ranges, for example duration or month
- Transform groupings into columns. For example turn a monthly grouping into columns for January, February, March, etc.
- Bring data in from multiple objects and join it. For example, broker information joined with transactions, to create commissions grouped by broker.
- Calculate custom columns, for example, the average time for an order to get filled per market cap group or how often a fund redemption (on units) is higher/lower than the NAV at notice day.
Limina’s data export engine allows you to do all these operations easily within the user interface, without technical expertise.
Shortcomings of existing portfolio reporting software
In our experience, reporting solutions must fall into one of 2 buckets:
- A “pure” reporting engine, performing no calculations
- If it performs calculations, only doing calculations that aren’t also done elsewhere (e.g. TCA)
If you already have those numbers elsewhere, it makes little sense with a reporting system that performs its own calculations of exposures, P&L, performance, cash, etc. You’d just be adding another source that can be (will be?) inconsistent and need reconciliation and break resolution workflows – costing time and money to maintain.
Now, it matters less if, for example, your investment accounting and reporting software are separate systems or the same. We have two items of recommendation in either case:
- If evaluating a standalone investment reporting software.
Check how easy (or hard) it will be to integrate with your data sources, both other internal systems and external providers. The differences can be substantial (10x+).
- If evaluating a reporting system integrated into another system.
Check how to build new reports, is it easy to do yourself? And what if you need to join on new data not in the system with the built-in reporting engine?
Selecting an investment management reporting software
Multiple lists we found online recommend looking at things like robustness of analytics, adhering to new regulation and security. Those are all table stakes; no reputable vendor will fail on these accounts.
Instead, dig deep into the two major functional areas we explored above:
1. Capabilities for preparing data
2. Functionality to format the data
Beyond those, the primary decision you need to make is if you prefer reporting to be standalone and have to deal with calculations in two places and data synchronisation. Or if you’d like reporting to be part of your Investment Management System (e.g. Front-to-back system).