How Cognivo Implemented the Automated, Timely, Accurate & Visually Attractive Reports for a Growing Multi Strategy Hedge Fund
A large global multi-strategy hedge fund with over $2.5Billion in Assets Under Management (AUM).
The investment management firm used various legacy methods and systems, including Microsoft Excel workbooks, and Microsoft Access databases, CSV files from third parties to store their data.
In addition, the asset allocation, portfolio, and P&L data were being manually extracted from Advent’s Moxy trade order management system and Axys® portfolio management solution. These files were stored in a pre-determined folder structure on a network drive and were maintained by specific team members within the operations team.
As the number of investors grew, and they started diversifying their investments, the shortcomings of having such an ad hoc method of storing, aggregating, and analyzing this data became increasingly apparent.
There were regular issues with data being in inconsistent formats, missing data, and more importantly, it became quite difficult to use this data for any kind of reporting (investment, operational, compliance, even investor reports).
The Cognivo team understood the challenge and documented the requirements of the project over discovery calls and meetings with the client’s operations team. The Cognivo team subsequently designed a new database architecture, based on the data dictionary derived by analyzing various data sources and the final reporting requirements.
The team then designed and developed a software application that automated the intelligent gathering of data, and subsequent analysis and reporting. Most of the nightly processing is now being down right after the market close, and any issues with data are being processed much quicker, so they can be reviewed and rectified.
The approach involved centralizing and aggregating the critical investment and operations data required to perform day-to-day fund operations and reporting. By centralizing data from various sources into one central data source, as well as automating the report generation, based on compliance and other internal requirements, the investment manager’s reports are now automatically generated the same evening, soon after market close.
The automated reports are delivered to the various users and decision-makers within an hour of market close. Also, Cognivo recommended that the software be designed to include reconciliation checks at various stages to ensure data integrity and validity, which has practically eliminated any erroneous reports.
The project took less than nine weeks to implement. More importantly, implementing this one-time bespoke solution enabled the client to own their fund data, and store it internally, instead of relying on an external provider.
Implementation of this in-house solution also saved the client from paying monthly subscription fees for expensive off-the-shelf solutions that were not highly customizable. Furthermore, as the solution has been customized for the client, making enhancements and upgrades based on the specific needs of the client is now relatively easy to accomplish.
What We Delivered
Automated, timely, accurate, and visually attractive internal and investor reports with interactive charts and drill-downs.
The automated aggregation and centralization of critical investment and operations data allowed the entire research and analysis process to be automated, predictable, timely and reliable.
The feature-rich investment research and analysis became available via web based, centralized interactive dashboards to the investment officers, thereby eliminating the need to ask the investment team for manual analysis. The biggest achievement however was the accuracy of the reports being generated, which improved by over 90 percent. In addition, Cognivo added various automated reconciliation checks on the input data as well as the generated reports, before they were presented to the investment officers or the investors.
Complete integration across various internal and external systems.
The modernized system, having been developed using the latest programming languages and APIs, is open in format, which allows for easy integration with other systems that the investment firm uses. The system also automatically extracts data from various internal and external sources via API, and FTP. Then post-process, the data is stored in a centralized data warehouse.
Highly efficient workload management.
The middle and back-office operations team no longer need to gather data manually from various sources, and then reconcile the data after generating the reports.
According to the Chief Operating Officer, the biggest advantage of this new solution is that this allowed them to better utilize their small team of analysts, who are now able to use their time performing more meaningful tasks for the firm.
Exceptional return on investment (ROI).
According to the Chief Operating Officer, the man-hours saved by automation allowed at least one full-time role to be dedicated to other functions within the firm, thereby saving them $75,000 to $90,000 per year.