Active managers need fast and easy ways to show how the performance of their portfolios differed from their benchmark indices. They require precise ways to assess asset allocation, security selection and contribution to return.
Building an attribution engine capable of handling these requirements is easy. The hard part is gathering and managing the data needed to 'fuel' the engine. Why are the data management aspects of performance attribution so difficult? Following are some of the common data challenges that crop up in these projects:
Complexity - Performance Attribution solutions need to be connected to virtually all of a firm's production system, each of which is a source of security, account reference, and performance data that needs to be taken in, normalized and cleansed.
Moving targets - Just when you get your Performance Attribution view precisely the way you want it, your requirements change. Yesterday your focus was on industry sectors and countries; today it's on market cap ranges and asset class breakdowns. So you need to have the flexibility to accommodate the unknowns.
Scalability - Your Performance Attribution system might be able to handle 10 portfolios and 300 reports, but what about 1,000 portfolios and 30,000 reports? Are you able to quickly add on a few servers to let the solution scale?
Ownership and Access - If you have outsourced your attribution needs, do you have easy access to your valuable underlying data (holdings, transactions, and reference data) that could be re-used for other business processes and reporting? Is the solution cost effective in enabling it across the enterprise so everyone who is authorized has access to it?
Fitting in Your Window - You need to run more jobs with increasing complexity within your assigned processing window. The more jobs you squeeze in, the less time you have to accommodate upstream data corrections and sort out impacts on downstream systems.
At Kuberre Systems, we build systems that enable clients to overcome their toughest performance attribution data management challenges. To build these solutions, we use pre-built components included in the Kuberre Software Foundation, but we also incorporate substantial customization. For clients, the result is a true, end-to-end solution that precisely meets their unique requirements.
One example is the system we built for a large investment management firm that specializes in active international equity strategies. The client needed a solution that would help it significantly improve its contribution to return and attribution reporting capabilities. The firm's existing system was incapable of incorporating daily cash positions in its CTR reports. This was leading to significant errors in daily fund return calculations and eroding overall confidence in its performance data and reporting.
Re-using some of the existing systems that the client has already invested in, and in combination with components from our core software foundation layer, we built a new performance attribution platform that makes it easy for the firm to report daily contribution to returns at both the fund and participant levels, with daily transactions (including cash). In short, we addressed the client's problem with a solution that precisely met their requirements - and delivered it in record time.
Whether your firm runs high volumes of attributions on a monthly or quarterly schedule, or more of a need to run attributions on demand, we can help. To learn more about how the Kuberre Performance Attribution solution can meet all your attribution needs, contact us today.