Last updated: 23:09 / Wednesday, 26 September 2018
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Leading Manager Research Teams and Asset Managers Collaborate to Streamline, Digitize and Standardize Fund Due Diligence Processes

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Leading Manager Research Teams and Asset Managers Collaborate to Streamline, Digitize and Standardize Fund Due Diligence Processes
  • Word documents, Excel spreadsheets and PDFs are inefficient ways for Manager Research Teams to identify important changes
  • By creating common standards together, Manager Research Teams can focus on analysis rather than gathering and organizing information
  • The Standard Questionnaire for 40 Act Funds was co-created by eight Asset Managers and ten Manager Research Teams

Legacy processes for exchanging due diligence information are inefficient and expensive. They limit asset managers’ ability to thoroughly serve and engage dynamically with their clients. Forward-thinking Asset Managers and Manager Research Teams in the US collaborated on a new, digital investment due diligence solution called Door.

Due Diligence Questionnaires have long been the established method for Manager Research Teams to monitor their asset manager partners’ businesses and strategies to ensure there are no material changes that might adversely impact an investment proposition.
Word documents, Excel spreadsheets and PDFs are inefficient ways for Manager Research Teams to identify important changes. Fund analysts spend far too long reading the same information over and over hunting for change. Manager Research Teams also recognized that the vast majority of questions they ask are common. By creating common standards together, Manager Research Teams can focus on analysis rather than gathering and organizing information.

Asset Managers can now provide due diligence information to their clients in minutes rather than weeks. And Manager Research Teams are alerted to and can identify changes the moment they are made.

The Standard Questionnaire for 40 Act Funds was co-created by eight Asset Managers (such as Macquarie Investment Management, Eaton Vance, Franklin Templeton Investments and MFS) and ten Manager Research Teams. Door successfully launched with this core group in July. 40 Manager Research Teams are now registered to use Door in the US. Door launched a UCITS due diligence service late last year and is already working with 46 global Asset Managers and 160 Manager Research Teams internationally.
Door is provided to Manager Research Teams at no cost.

Todd Wilhelm, Senior Area Mutual Fund Research Analyst at Edward Jones, said: “One of the value propositions we provide in our manager research comes from our unique insights. The gathering and organizing of critical but commonly asked for information through proprietary DDQs is time consuming and may not differentiate that portion of our process from others. Using an industry-wide standardized format of these commonly asked questions allows my team to get the information more quickly and easily comparable. It allows us to make decisions more efficiently and identify important changes that may impact our investment thesis.”

Andrew Washburn, Chief Marketing Officer at MFS Investment Management, said: “We and our clients have common issues with fund due diligence. So, collaborating with them to solve these issues is an innovative approach. As a fast adopter of new technology solutions, we were an early supporter of Door. At MFS we are always seeking new ways to improve our clients’ experience. On Door, we can provide a faster and smoother flow of fund information to our clients.”

Stephen Beinhacker, Managing Director and Global Head of Manager Research at SEI Investments, observed: “Gathering and tracking manager-supplied information is a two-way bottleneck in the industry. For asset managers, responding to bespoke RFI/Ps from asset owners is time consuming and 80%+ of what is asked is the same basic information, even if worded differently. For asset owners, staying on top of initial and ongoing documentation is also time consuming, but more importantly, getting a similar set of information in the same format from multiple asset managers expedites comparability. Ultimately the ability to capture text and data in a common digital form will abet more advanced forms of manager due diligence that can leverage advanced mathematics, natural language processing and artificial intelligence.”

More information can also be found on the Door website.
 

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