Data: What do investors want?
Fundraising is a hypercompetitive market in 2019. Your X-Factor may be smart technology able to effectively communicate with investors.
In an environment of digital, it is imperative that the fundraising environment incorporates technology around data, to better service the investors. It is important for each asset manager to think about what they are doing, that is compelling enough to get an investors allocation. Today, additional levels of disclosure and tools to keep your investors more informed may seem forward-thinking, but will soon become the requirements of all investors and fundraisers.
With an increased number of funds in the market (there has been an average of 50 fund launches every 6 months, over the last 2 years in India), and this number is bound to increase over the next 5 years. Investors are becoming savvier as to which fund they want their wallet allocation into, and doing more of the same is no longer sufficient.
Fintuple works as an infrastructure layer digitally enabling the asset management industry. What does this mean?
Imagine going to your local pharmacy and asking them which doctor you should get treated by? In the current regime in India, funds are ‘sold’ by distributors based on their ‘assessment’ of the fund. The information that the investors have on the fund, is controlled by the distributor that the investors transact through. This has resulted in very little information available on a fund, its performance, the fund manager background, and its track record – let alone additional details on any analysis of the fund and its underlying portfolio. Moreover, there has been very little independence in the alternative industry due to this lack of data.
We are talking about a $25bn market that has been invested into the Indian fund management in the way above.
However, we envision this changing and are driving this change. The Fintuple platform allows qualified investors and wealth managers access the portfolio information and proprietary research on the fund of choice, compare and contrast them at the click of a button. More importantly, the proprietary research on each fund on the platform provides a rating on each fund launched, both current and past for the industry to a benchmark of.
Today, when investors are handling thousands of quarterly letters and marketing information from a myriad of funds, most of the information gets lost. The technology behind Fintuple, allows access to all content under one repository for the investor, alongside the research done on the fund eco-system by the team of data-scientists and analytics at Fintuple.
Investors value consistency around data and the funds of their choice, and not be shown information only when there is a new launch of a fund when the funds are trying to raise money. Many intermediaries claim top quartile performance of the funds they are marketing based on cherry-picked methodologies and benchmarks of their choice. The team at Fintuple aims at democratizing the data, analysis, and research to ensure decision making becomes seamless.
Data: More, faster
Of course, not just any performance metric will do nowadays. Moreover, performance is an output based on the combination of inputs that each fund manager employs. Fintuple starts off with a performance breakdown of all the funds on the platform and allows investors to match their risk profile to the kind of funds/strategies that would suit their style.
Giving existing and prospective investors the information is clearly, far from an easy task – and one the industry is not clearly getting right. Around 100 responses we gathered from investors we interviewed ( mix of family offices, UHNIs, institutional investors and FIIs) said that the overall data disclosures are selective and not sufficient.
In our journey at Fintuple, we have onboarded and partnered with both large and boutique fund houses and run into multiple situations where the fund houses are willing to share detailed information with us and open up their investment process for us to onboard them onto our platform. Funds have said – “I am willing to communicate more, but I do not want all my information in the open and being leaked”.
Therefore at Fintuple, we use a level of security which is bank-grade and is more secure than emailing your information through attachments. This ensures access to research and analysis can be managed by the data providers. This ensures that data and access to data is controlled.
Today, investor communications are not something most funds can take for granted and at Fintuple, we value consistency over prolonged periods with managers and funds we work with. A recent survey among an investor community revealed that 71% of investors have not invested in funds due to a perceived lack of transparency – A sobering thought for any asset manager.