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A New Solution for Investment Operations

by trusted insight posted 8months ago 2310 views
Is your investment operations team stretched to the max? If so, you’re not alone: LPs across the country and around the world are experiencing operations constraints related to the proliferation of electronically distributed investment documents. And while there’s no shortage of software promising to resolve the mounting headache of digital documentation, there isn’t a software platform that’s managed to fully automate the process—until now.

Over the past two decades, the digitization of investment documents vastly reduced the need for administrative labor. But as investor portals and methods of electronic distribution multiplied, many LPs have been forced to hire full-time staff just to manage these documentation channels. A lack of consistency and centralization makes matters worse: some fund managers send their investment documents via email, while others require that LPs log in to document portals hosted on their websites. Usernames and logins for these accounts must be managed by operations staff, and some portals even require that admins remember to use a specific web browser. Likewise, downloading and renaming the documents for electronic filing must be performed by an operations professional. This painstaking administrative labor is not only boring, it’s unsustainable: no one can be expected to make a career out of such tedious work. 

The problem is acute at both ends of the organizational spectrum: investors at smaller LPs without a robust operations support staff may find themselves wasting hours searching the right documents—or worse, for the passwords to one of the dozens of portals they need to access. Larger and growing LPs add new funds at a rate that outpaces exits from older funds, and have ongoing relationships with hundreds of GPs, all of whom have their own separate document access methods and idiosyncratic document nomenclature. As a result, larger institutions with well-staffed operations teams find themselves losing more and more staff hours to the document hunt. The sheer volume of managers and related documents make document navigation a daunting challenge that requires expensive human resources—and priceless time. This paper chase is a well-known problem throughout the industry, and is recognized as an area ripe for innovation.

LPs in the Trusted Insight network now have a solution to this dilemma: Fund Cogito, a robotic automation software, integrates with 100+ investor portals from across asset classes, offering LPs one interface to access all their investment documents across all asset classes 

Fund Cogito makes it unnecessary to manage dozens of portals and passwords individually: after accounts and passwords are added, Fund Cogito automatically logs in to download and classify relevant investment documents on a regular basis. It also enables users to establish standard nomenclature for each file type, eliminating the need to rename documents, and making the database easier for the entire team to search. 

As Stanford business researchers Ashby Monk and Dane Rook write in their 2020 book The Technologized Investor, “Investors typically spend just 1 or 2 basis points (0.01-0.02%) of the total assets in their care on technology, data, research, innovation, and related efforts.” This is far less than the 50 or so basis points many often spend on fees paid to external managers. However, organizational software like Fund Cogito allows analysts to spend more time actually analyzing the data they already have, rather than trying to chase it down. These priceless human assets are worth an investment in software that can wrest them back from the document chase. 

Euan Beer, an investment operations professional at Kamehameha Schools, told Trusted Insight that Fund Cogito has eliminated hours of administrative labor each week, allowing operations staff on his team to focus on gleaning insights from the documents and assembling those insights into data-rich reports for their investment staff. At Kamehameha, Fund Cogito works in tandem with Dynamo. Whereas Dynamo is ordinarily a manual-intensive platform, Beer observed, the Kamehameha operations team uses Fund Cogito to download, classify, and rename documents before pushing them to Dynamo. In this way, Beer explained, Fund Cogito enriches the volume and quality of data stored, allowing the team to provide more and higher-quality insights to investment analysts.

Fund Cogito is now at work developing additional features, including the Document Understanding Pipeline, which uses machine learning to recognize and extract line-items from various documents types, such as fee amounts from a capital account statement, or company portfolio data from a statement of assets. To offer LPs the best possible service, Fund Cogito is currently by invitation only.

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