Product Archives - ISC

Fund Mergers: Navigating Complexity in Asset Management

Kelly Goldie — Thu, 27 Mar 2025 11:44:08 +0000

Fund Mergers: Navigating Complexity in Asset Management

One activity that we expect to see a lot of in Asset Management in the coming years is consolidation of funds. We see a number of drivers for this, for example squeezed fees creating tighter margins that make sub-scale funds uneconomic, increasing interest in reducing the discounts on Investment Trusts, and government incentives to consolidate council pension schemes.

Merging collective investment funds can be a complex process with numerous operational challenge, but it’s a fairly well trodden route where experience can help with the creation of requires meticulous plans, rigorous execution, and careful management across multiple teams, both internal and external.

The first consideration lies in harmonizing investment strategies and portfolios. Reconciling differences in investment approach, asset allocation, and risk profile demands is the first step in creating the target portfolio. Both trading to this targe and transferring assets from donor to receiving fund is simple in liquid, freely traded, non-taxed markets. However, complications arise with Stamp Duty in UK, Hong Kong and others; open derivatives contracts (including FX Forwards), and markets where securities cannot be freely transferred between custody accounts. These can all end up incurring significant costs on top of the basic effort and resource costs without a mitigation strategy. Fortunately, there are plenty available.

Technological integration can present another critical operational hurdle when merging funds across different firms or technology platforms, with varying systems for trade execution, portfolio management, reporting, and compliance monitoring. Harmonisation of static data is crucial in advance of any data migration, as well as potential system upgrades to ensure seamless operational continuity. Maintaining uninterrupted service during the transition period is critical.

Regulatory compliance can emerge as a challenge for cross border mergers where each jurisdiction may have different requirements for fund mergers, necessitating careful navigation of regulatory landscapes. This includes obtaining necessary approvals from regulatory bodies, ensuring compliance with disclosure requirements, and managing potential cross-border regulatory complexities. Asset managers must prepare comprehensive documentation, conduct thorough due diligence, and potentially restructure fund vehicles to meet regulatory standards.

Investor communication and management also needs to be built into the plan and (along with regulatory approval) will typically define the critical path. The merger process requires transparent and timely communication with existing investors, addressing potential concerns about changes in investment strategy, fees, performance, and fund governance. This involves developing comprehensive communication strategies, preparing detailed prospectus updates, and potentially conducting investor meetings or roadshows to explain the rationale and benefits of the merger.

Continuity of performance tracking and reporting requires careful consideration. Managers must develop robust methodologies for knitting together the pre and post merged funds, ensuring transparency and maintaining investor confidence. This includes creating comprehensive performance attribution models that account for the merger's impact on historical returns and future investment strategies.

Risk management becomes paramount during fund mergers. Operational risks include potential disruptions to investment management, trading capabilities, and reporting mechanisms. Comprehensive risk assessment and mitigation strategies must be developed to address these potential vulnerabilities and ensure minimal disruption to fund operations.

The complexity of merging collective investment funds underscores the need for meticulous planning, robust technological infrastructure, and comprehensive strategic approach. Success depends on carefully navigating technological, regulatory, and operational challenges while maintaining a clear focus on investor interests and long-term fund performance.

ISC has experience of dozens of fund mergers across multiple fund structures and have experience of many of the pitfalls and mitigating strategies. Contact us to support your fund merger activity.

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We understand your challenges

We provide solutions

We help with implementation

The post Fund Mergers: Navigating Complexity in Asset Management appeared first on ISC.

Jargon Busting: Fund Tokenisation – Decoding the Digital Investment Revolution

Kelly Goldie — Tue, 25 Mar 2025 10:45:42 +0000

Jargon Busting: Fund Tokenisation - Decoding the Digital Investment Revolution

Fund tokenisation is creating a stir in the investment management industry, and it comes with a whole new vocabulary. Let's get down to some jargon busting where we’ll unravel the buzzwords and simplify the process:

What is Fund Tokenisation?

Essentially, it’s the process of turning traditional investment fund shares into digital tokens on a blockchain. Think of it as digitising ownership. Instead of paper certificates, you get digital tokens that represent your stake that can be easily traded, transferred and managed.

Key Components:

Underlying Assets: These are the real-world assets (RWA) the fund invests in: stocks, bonds, real estate, art, etc.

Tokens: Digital representations of ownership of those assets - Asset tokenisation focuses on ownership of a single asset whereas fund tokenisation involves creating tokens that represent ownership of a portfolio of assets i.e. a mutual fund.

Technology Platform: The system used to create, issue, and manage the tokens.

Legal Structure: The framework ensuring compliance with regulations.

The Technology Behind It:

Blockchain: A type of distributed ledger technology (DLT). It's a secure, transparent, and immutable record of transactions. Imagine a digital ledger, like a giant spreadsheet, that keeps track of transactions. Now, imagine this ledger is not stored in one central location, but is distributed across a vast network of computers. That's essentially what a blockchain is.

Distributed Ledger Technology (DLT): A decentralised system for recording transactions and data, shared across multiple participants across a network, eliminating the need for a central authority. It ensures transparency and security. Blockchain is the most well-known example of a DLT.

Smart Contracts: Self-executing contracts written in code. They automate fund administration processes, like token issuance, distributing dividends or transferring ownership, without intermediaries. They are stored on the blockchain.

Token Standards: Standardised token protocols, such as ERC-20 (on the Ethereum blockchain), define the rules for creating and managing tokens. These standards ensure interoperability between different platforms and wallets.

Digital Wallets: Software or hardware that investors will use to store and manage their tokenised fund units.

Cryptography: The science of secure communication. It protects transactions and ensures the integrity of the blockchain.

4. Key Benefits Demystified:

Liquidity: Tokens can be traded more easily than traditional fund shares on 24/7 decentralised exchanges (DEXs). This means you can buy or sell your investment faster.

Fractional Ownership: You can buy small pieces of high-value assets. This broadens access to investment opportunities.

Transparency: Blockchain provides a clear and verifiable record of all transactions.

Efficiency: Automation through smart contracts reduces paperwork and intermediaries, potentially lowering costs.

Accessibility: Tokenisation can make investment funds accessible to a wider range of investors globally.

The High-Level Process in Simple Steps:

Some Important Considerations:

Security Tokens: Security tokens are digital representations of traditional securities such as stocks, bonds or fund shares and are subject to regulatory requirements.

Custody: Secure storage of digital tokens is critical.

Regulatory Compliance: Adhering to securities laws and regulations is essential.

Decentralised Finance (DeFi): Financial services built on blockchain technology. Tokenised funds can be integrated with DeFi platforms.

In essence, fund tokenisation is about bringing the benefits of digital technology to the world of investment funds. It's about making investing more accessible, efficient, and transparent.

By understanding the jargon and embracing the potential of this transformative technology, investors and fund managers can position themselves to capitalise on the opportunities presented by the future of investment management.

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Fund Tokenisation – 10 challenges you should be aware of…

Kelly Goldie — Fri, 07 Mar 2025 11:04:40 +0000

Fund Tokenisation - 10 challenges you should be aware of...

As the topic of Fund Tokenisation in Asset Management continues to gather rapid pace and take-on here in the UK and other regions, whilst offering numerous potential benefits, it also poses several challenges - We have highlighted 10 key areas that you should be aware of:

Regulatory Uncertainty

Evolving Landscape - The regulatory landscape surrounding tokenised securities is still developing and varies across jurisdictions. This will no doubt create uncertainty for fund managers and investors.
Legal Classification - The legal classification of tokens can be unclear, leading to complexities in complying with existing securities regulations.
Cross-border Issues - Differences in regulations across countries can complicate the cross-border distribution and trading of tokenised fund shares.

Technological Challenges

Infrastructure - Implementing tokenisation requires robust technological infrastructure, including blockchain platforms, smart contracts, and secure custody solutions.
Interoperability - Ensuring interoperability between different blockchain platforms and traditional financial platforms is crucial for seamless trading and settlement.
Cybersecurity - Tokenised assets are susceptible to cyberattacks, requiring strong security measures to protect against theft and fraud.

Operational and Administrative Complexities

New Processes - Fund managers will need to adapt their operational processes to manage tokenised securities, including issuance, transfer, and record-keeping.
Compliance - Integrating KYC/AML compliance into tokenised fund offerings can be complex and require specialised solutions.
Valuation - Valuing tokenised assets, especially illiquid ones, may be challenging and require new methodologies.

Market Adoption and Liquidity

Investor Education - Investors will need to be educated about the benefits and risks of tokenised funds, which may take time.
Market Acceptance - The widespread adoption of tokenised funds depends on market acceptance and the continued development of a robust ecosystem.
Liquidity - Ensuring sufficient liquidity for tokenised fund shares can be a challenge, especially in the early stages of market development.

Cost Considerations

Technology Investment - Implementing tokenisation requires significant upfront investment in technology infrastructure and expertise.
Ongoing Costs - Ongoing costs include platform maintenance, compliance, and administrative expenses.

Governance and Control

Smart Contract Risks - Smart contracts governing tokenised funds need to be carefully designed and audited to avoid vulnerabilities and unintended consequences.
Decentralisation vs. Control - Balancing the benefits of decentralisation with the need for control and oversight will require consideration.

Accounting and Reporting

New Standards - Existing accounting standards may need to be adapted to accommodate tokenised securities.
Reporting Requirements - New reporting requirements may be necessary to ensure transparency and investor protection.

Tax Implications

Tax Treatment - The tax treatment of tokenised funds and their distributions may be unclear and vary across jurisdictions.
Tax Compliance - Ensuring tax compliance for tokenised fund offerings could be complex.

Investor Protection

Custody and Security - Ensuring the safe custody and security of tokenised assets is crucial for investor protection.
Fraud and Manipulation - Tokenised markets may be vulnerable to fraud and manipulation, requiring appropriate safeguards.

Legal and Contractual Issues

Smart Contract Enforceability - The legal enforceability of smart contracts will require clarification across different jurisdictions.
Liability - Determining liability in case of errors or disputes related to tokenised fund transactions could be complex.

Addressing these challenges will be crucial for the successful tokenisation of funds. Collaboration among regulators, industry participants, and technology providers will be essential in developing standards, best practices, and a clear regulatory framework.

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Fund Tokenisation – Market Activity

Kelly Goldie — Fri, 07 Mar 2025 11:02:10 +0000

Fund Tokenisation - Market Activity

Last year we mentioned that Fund Tokenisation could be the next big thing in UK Asset Management and across the globe.

As we move into 2025, what does the landscape look like for Fund Tokenisation?

Let’s look at some headline market activity in this space during the last 6 months…

Fasanara Capital, a UK-based institutional investment manager has launched its first tokenised money market fund, being hosted on the Polygon public blockchain.
UK based Fidelity International has tokenised one of its money market funds using JPMorgan’s Onyx Digital Assets blockchain.
A partnership between digital securities distribution platform Assetera and FCA regulated digital securities exchange Archax will enable investors access to tokenised real-world assets (RWA) in the UK, EU & EEA. The platform will provide access to tokenised money market funds from UK based investment manager Abrdn.
Janus Henderson Investors partnering with web3 native asset manager Anemoy and RWA tokenisation firm Centrifuge to manage Anemoy’s LTF tokenised fund.
Germany’s Metzler Asset Management in partnership with Fundsonchain and Cashlink piloted issuing tokenised fund shares.
Franklin Templeton has received approval from Luxembourg’s regulator CSSF to launch a tokenised UCITS fund to be hosted on a public blockchain.
Alternatives asset manager Apollo Global has partnered with tokenisation specialist firm Securitize to offer investors a new tokenised private credit fund.
Blackrock has one of the largest tokenised money market funds – BUIDL. It is available on six blockchains; Ethereum, Aptos, Arbitrum, Avalanche, Optimism’s OP Mainnet & Polygon.
Alternatives investment manager Hamilton Lane has partnered with crowdfunding platform Republic and aims to offer private investors the opportunity to invest in tokenised funds.

The list goes on…

Growth in Fund Tokenisation is on a steep rise – as of late 2024, tokenised funds went past the $2 billion AUM mark with some industry experts citing tokenized funds reaching over $600 billion AUM by 2030.

McKinsey & Company have predicted that tokenised financial assets are tracking to reach a market size of around $2 trillion by 2030 due to increased adoption of tokenisation by mutual funds, exchange traded funds and alternative funds.

Investment industry forward-thinkers will note that the overall key benefits tokenisation affords will outweigh the challenges to adopt. Tokenisation is now firmly here to stay.

This year we may well see the convergence of tokenisation, blockchain technology and traditional finance, creating a transformative shift in the financial ecosystem.

Are you ready to discuss? Contact us at product@iscltd.com to see how we can help.

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We understand your challenges

We provide solutions

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Some Thoughts on the Implementation of an ETF Capability

Kelly Goldie — Fri, 31 Jan 2025 16:11:27 +0000

Some Thoughts on the Implementation of an ETF Capability

The rise of ETFs is impossible to ignore! From $1 trillion in assets in 2008 to over $15 trillion in early 2025, ETFs are reshaping modern investment portfolios.

With their diversification, liquidity, and low costs, they’ve become a must-have for investors. For investment managers, incorporating ETFs into their offerings is becoming a strategic move, complementing traditional mutual funds while introducing new opportunities and challenges.

Adapting to this shift requires careful adjustments to ensure smooth operations and maintain investor confidence.

Key Operational Considerations for ETFs

Role of Authorised Participants (APs)

ETFs rely on Authorised Participants (APs) to bridge the gap between the Sponsor and the Secondary Market. APs ensure that ETF prices remain aligned with the underlying assets by arbitraging away premiums and discounts.

Investment Managers must establish robust internal teams to handle the flow of ETF share creation and redemption with APs. This often necessitates front-office expertise and dedicated resources to manage relationships and operations effectively. While existing teams may possess transferable skills, reallocating roles or onboarding new resources might be required to avoid operational bottlenecks.

ETF Administration

Appointing an ETF Administrator is another pivotal step. While current Administrators may handle mutual funds effectively, ETF administration introduces distinct requirements:

Portfolio Composition File (PCF) Creation: Administrators must quickly and accurately produce PCFs, potentially multiple times per day, especially during benchmark rebalancing.

Corporate Actions Management: Timely and precise handling of corporate actions data is essential to maintain seamless creation/redemption processes.

Technology and Data Integration: ETF operations demand advanced interfaces and data flow management, ensuring efficiency and accuracy across human and automated processes.

Administrators with a dedicated and experienced ETF operations team will stand out as partners capable of supporting high-quality and scalable operations.

Expanding ETF Varieties and Use Cases

ETFs are evolving beyond traditional index-tracking products. Actively managed ETFs, thematic ETFs, and those incorporating ESG (Environmental, Social, and Governance) factors are gaining traction. Investment Managers must assess how these emerging ETF varieties align with their strategies and operational models.

Additionally, regulatory scrutiny continues to rise as ETFs become more sophisticated. Managers must ensure compliance with jurisdiction-specific regulations and stay ahead of evolving guidelines to maintain credibility and operational integrity.

The ETF Advantage

ETFs remain an essential component of a diversified investment strategy. Their ability to provide cost-efficient access to global markets, liquidity, and transparency makes them invaluable in today’s financial landscape. With innovations such as semi-transparent ETFs and tokenized ETFs emerging, the potential for growth and diversification within this asset class has never been greater.

How ISC Can Help

ISC offers expert guidance to streamline ETF capability setup and optimise existing operating models. Whether you are considering entering the ETF space or enhancing your current offering, our team provides tailored solutions to navigate the complexities of ETF administration, AP management, and operational scalability.

We listen to your needs

We understand your challenges

We provide solutions

We help with implementation

The post Some Thoughts on the Implementation of an ETF Capability appeared first on ISC.

Product Master Series – Building a Business Case

Neer Gandecha — Wed, 09 Oct 2024 16:16:17 +0000

Building a Business Case for a Product Master

A business case should provide a clear articulation of the strategic objectives and the pain points the Product Master will address. It's essential to quantify the benefits in terms of risk reduction, cost savings, compliance improvements and revenue enhancement. Highlight how a consistent data model and single source of truth can serve as a catalyst for data-driven decision-making, offering a competitive edge and facilitating compliance with ever-evolving regulatory requirements.

While every firm’s needs are different, there tend to be some common benefits and challenges.

Benefits

Robust Regulatory Reporting: Streamlines processes, ensuring accuracy and timeliness that meet regulatory standards.
Operational Efficiency: Minimises manual reconciliations, reducing errors and operational costs.
Risk Management: Facilitates a unified risk management approach, enhancing visibility and control.
Enhanced Financial and Strategic Analysis: Consolidation into a single source of truth eradicates the inefficiencies of disparate spreadsheets, fostering more informed decision-making.

Challenges

Cost: There is a definite up-front cost, with nebulous potential cost benefits in the longer term.
Administrative Burden: Establishing and maintaining a Product Master requires significant up-front effort and resources.
Cultural Adoption: Transitioning to a centralised data management system may face resistance due to unfamiliarity.
Organisation Structure: Protracted delays, or worse, vacuums can occur when changes to the organisation structure are required.
Integration Complexity: Merging various data sources into one can be daunting and resource intensive.

Mitigating Actions

When presenting the business case, it is worth noting some actions to mitigate the drawbacks, these are:

Cost Reduction: If possible, emphasise any cost reduction from operational efficiency
Stakeholder Management: Emphasise the strategic and operational benefits to key stakeholders, showcasing the impact on the business's bottom line and competitive positioning.
Embrace a Consolidated View: Highlight the elimination of siloed data and the move towards a single source of truth as a way to remove or reduce integration complexity in the medium term.
Change Management: Plan to address cultural and adoption challenges by focusing on training, communication, and potentially demonstrating quick wins to foster buy-in.

Conclusion

Engage key stakeholders early, for example, the Head of Product, COO, and Head of Data are obviously crucial for championing the initiative. It may be worth thinking laterally and seeking a chorus from other impacted stakeholders, for example, Finance, Strategy, Fund or Regulatory Reporting, Investment Risk, Performance, and a myriad of operational teams. Their insights can help refine the strategy, ensuring it aligns with broader business goals and addresses specific operational challenges.

Product Master Series

This is the first weekly article in a series focussing on implementing a Product Master. The articles focus on the following topics:

Scope of the Product Domain
Product Master Operating Model
Downstream Integration
Workflow and Mastering Interaction
Building a Business Case

Subscribe for email updates on this Product Master series

We will only use your email to send product master series updates unless otherwise agreed.

We listen to your needs

We understand your challenges

We provide solutions

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The post Product Master Series – Building a Business Case appeared first on ISC.

Product Master Series – Workflow Integration

Neer Gandecha — Fri, 19 Jul 2024 07:55:45 +0000

Integrating Workflow Tooling with a Product Master: Enhancing Onboarding and Product Lifecycle Management

The ability to efficiently manage product onboarding and lifecycle changes is crucial. This efficiency can be significantly enhanced by integrating workflow tooling with a Product Master. Such integration not only streamlines processes but also ensures that data remains accurate and current throughout a product’s lifecycle. This article examines the advantages of this integration and provides insights into executing it effectively.

The Importance of Integration

The integration of workflow tooling with a Product Master brings several key benefits to investment management firms:

Streamlined Onboarding: Integrating workflow tooling simplifies the product onboarding process, automating tasks such as data collection, validation, and entry into the Product Master. This reduces manual errors and can potentially accelerate time-to-market for new products.

Seamless Lifecycle Management: Changes to a product over its lifecycle, including updates to investment strategies, fees, or regulatory disclosures, can be managed more effectively. Workflow tooling ensures that any changes are accurately reflected in the Product Master in real-time, maintaining data integrity.

Enhanced Compliance and Risk Management: By automating the flow of data and ensuring its accuracy, firms can better comply with regulatory requirements and manage risks associated with product data discrepancies.

Improved Operational Efficiency: Automating workflows reduces the administrative burden on staff, freeing them to focus on higher-value tasks. It also decreases the likelihood of data silos, promoting a more unified view of product information.

Implementing Integration

To realise these benefits, firms must approach the integration of workflow tooling with a Product Master thoughtfully and strategically:

Assess Current Processes: Begin by evaluating existing workflows and identifying areas where automation and integration can bring the most value. This includes pinpointing bottlenecks in the product onboarding process and lifecycle management that could benefit from streamlined operations.

Choose the Right Tools: Select workflow tools that can be easily integrated with your Product Master and that offer the flexibility to adapt to your firm's specific processes and needs. Consider tools that provide customisable workflow templates, role-based access control, and robust data validation capabilities.

Define Clear Workflows: Map out detailed workflows for product onboarding and lifecycle management. This includes defining each step of the process, from initial data collection to final approval, and identifying who is responsible for each task.

Ensure Data Consistency: Establish rules and validations within the workflow to ensure that data entered into the Product Master is consistent and meets quality standards. This might involve automatic checks against predefined criteria or alerts for manual review when anomalies are detected.

Train and Support Your Team: Implementing new tools and processes requires a cultural shift within the organisation. Provide comprehensive training for all users and establish a support system to address questions and challenges as they arise.

Monitor and Refine: After implementation, continuously monitor the performance of the integrated system. Collect feedback from users and use it to refine workflows and tool settings to better meet the needs of the business.

FundSense's Approach FundSense Case Study About FundSense

FundSense's Approach

FundSense’s mission is to provide the best solutions to eliminate manual tasks, increase efficiency and reduce costs across all departments at asset management and wealth management firms.

Intelligent Automation functionality includes workflow tools for fund and share launch/closure, end-to-end regulatory and client reporting, and data management/ dissemination; a powerful document analyser to extract and verify any information in any document, and chatbots/web portals for staff, advisers and customers.

FundSense eliminates manual processes, error-prone tasks, and overreliance on spreadsheets/inefficient systems, enabling improved governance and compliance across the entire organisation.

FundSense Case Study

The Challenge

A global asset manager with over $1.5 trillion in assets under management faced ongoing challenges across fund and share class launches, reporting to vendors and managing fee data. This was partly caused by the use of spreadsheets, legacy systems and inefficient third-party processes – each with limited governance and available BI/analytics.

The Solution

The firm implemented the FundSense Intelligent Automation Platform across its operations in the UK, Luxembourg and the US with a fully customised, highly efficient solution that solved the challenges in an automated and integrated fashion.

The implementation had an immediate significant impact by increasing governance/data accuracy and eliminating manual tasks – and over time, the time to launch products and report to third parties was reduced significantly. In addition, the Process Analytics and Data BI modules enabled ongoing process improvements by allowing ‘deep dives’ into the details of the tasks undertaken by internal teams and third parties globally.

About FundSense

FundSense works with clients to implement Automated Workflows, Robotic Process Automation, Artificial Intelligence and Natural Language Processing wherever they are needed across the business. This delivers drastic improvements in efficiency across internal and client operations – from eliminating manual processes and spreadsheets to improving the availability and flow of information.

By leveraging all available data, the platform enables users to make better, faster and more informed decisions through access to powerful Business Intelligence and Management Information.

The FundSense platform is built with a no code / low code approach, which means that business applications can be developed and deployed quickly and efficiently - up to 20 times faster than traditional methods.

https://www.fundsense.io/

Conclusion

Integrating workflow tooling with a Product Master offers investment management firms a powerful way to enhance the efficiency and accuracy of product onboarding and lifecycle management. By carefully selecting tools, defining clear workflows, and ensuring ongoing support and refinement, firms can achieve a seamless integration that supports their operational and strategic goals. In doing so, they can maintain a competitive edge in a rapidly evolving market, ensuring their product data is a reliable asset for decision-making, compliance, and customer satisfaction.

Product Master Series

This is the first weekly article in a series focussing on implementing a Product Master. The articles focus on the following topics:

Scope of the Product Domain
Product Master Operating Model
Downstream Integration
Workflow and Mastering Interaction
Building a Business Case

Subscribe for email updates on this Product Master series

We will only use your email to send product master series updates unless otherwise agreed.

We listen to your needs

We understand your challenges

We provide solutions

We help with implementation

The post Product Master Series – Workflow Integration appeared first on ISC.

Product Master Series – Downstream Integration

Neer Gandecha — Wed, 17 Jul 2024 06:55:24 +0000

Maximising the Impact of a Product Master: Downstream Use Cases and Integration Strategies

A Product Master is a pivotal asset in the investment management industry, not just for centralising and maintaining product data but also for the value it delivers for various downstream use cases. By effectively leveraging a Product Master, firms can enhance fund reporting, meet regulatory demands with greater ease, conduct in-depth financial and strategic analysis, and improve overall data consumption across the organisation. This article explores these use cases and offers guidance on ensuring successful integration to fully harness the potential of a product master.

Key Downstream Use Cases

Fund Reporting: The Product Master facilitates accurate and timely reporting by providing a centralised source of truth for fund data. This improves the quality and reliability of reports shared with investors, enhancing transparency and trust.

Regulatory Reporting: With regulatory frameworks becoming increasingly stringent, a Product Master can streamline the reporting process by ensuring all regulatory data is accurate and accessible. This not only simplifies compliance but also minimises the risk of penalties for inaccuracies.

Financial and Strategic Analysis: A Product Master enables deeper insights into fund performance, market trends, pricing, and operational efficiencies. Analysts can leverage this consolidated data source to inform strategic decisions, identify investment opportunities, and optimise fund strategies.

General Consumption: Across the organisation, various departments benefit from access to the Product Master. From marketing to sales and client services, having accurate and up-to-date product data supports a range of activities, including client queries, marketing materials, and sales strategies.

Ensuring Effective Integration

To maximise the benefits of a Product Master in these downstream use cases, proper integration with existing systems and workflows is essential. Here are strategies to ensure integration success:

Define Clear Objectives: Start by identifying specific goals for each downstream use case. Understanding what you aim to achieve helps tailor the integration process to meet these objectives effectively.

Ensure Data Quality and Consistency: The value of a Product Master in downstream applications hinges on the accuracy and consistency of the data it contains. Implement robust data governance practices, including regular audits and validations, to maintain high data quality.

Leverage API Integration: Use application programming interfaces (APIs) to seamlessly connect the Product Master with other systems used for reporting, analysis, and data consumption. API integration facilitates real-time data exchange and ensures that downstream applications always have access to the latest information.

Train and Support Users: Ensure that users across different departments understand how to access and utilise the Product Master for their specific needs. Offer training sessions and create support resources to help users navigate the system effectively.

Monitor and Iterate: Post-integration, continuously monitor the performance and impact of the Product Master across downstream use cases. Gather feedback from users and analyse usage data to identify areas for improvement. Iteratively refine the integration and data management practices to enhance value over time.

Fencore's Approach Fencore Case Study About Fencore

Fencore's Approach

Fencore enhances downstream integration and maximises the use of a Product Master in investment management by addressing diverse data sources, such as legacy systems, proprietary databases, and unstructured formats. They emphasise the creation of a "one source of truth" through rigorous data validation, mastering, and governance, ensuring a consistent golden source of data for all departments. This central data repository supports every phase of the investment lifecycle, from strategy and regulatory approval to distribution and operations, improving data quality and reducing manual errors through workflow automation.

Moreover, Fencore synchronises the Product Master with the security master, avoiding data duplication and enhancing data granularity. This integration extends to post-trade processes, interacting with investment and accounting records, risk and performance measurements, and compliance frameworks. By developing a holistic, integrated data operating model, Fencore helps asset managers reduce operational costs, improve data quality, increase transparency, and create a competitive product portfolio in a demanding market.

Fencore Case Study

Rethinking product masters and data consistency throughout the lifecycle of investment vehicles:

The original request seemed simple enough. A fast-growing, international institutional asset manager reached out to share their frustration around product launches past and present and the lack of a centralised master. “Basically”, the recently appointed solution architect said, “We are unable to track, consistently, basic information around our products. We have significantly increased the number of launches, their complexity, composition, and global range. The workflow is manual, error-ridden, and troublesome. Our time to market needs to be improved. Finally, we believe we have a large degree of overlapping offerings, simply due to the lack of transparency.” Well, if you know that the origin of your trials and tribulations is internal, you know where to start: you start with the man – or the woman – in the mirror.

Address data sources

Data is collated from a myriad of sources: legacy data masters and systems, never intended to cater for the demands of modern products, proprietary databases, excel spreadsheets, sharepoint, word documents and unstructured data in formats from bygone times. You need to know where you are to move on.

Acknowledge the necessity of a “one source of truth” and accept that the “one source of truth” will be constantly evolving

A “one source of truth” is more than a question of data collation, validation, mastering, audit trail and data lineage. It is accepting the need of data discipline and data governance, across the organisation, and to implement the appropriate controls and processes. A successful deployment of these actions will establish a consistent golden source of data, which can be used across the organisation: from strategy and product teams, via legal and compliance, to sales and marketing. Post-launch it will provide the foundation for rigorous monitoring, valuations and performance measurement - and serve as the very foundation for future business development and refinement of products.

Time is a dimension

A product master needs to support every phase of the life cycle of the investment vehicle: from product strategy, regulatory approval and launch, via distribution, monitoring and operations, to its final divestment and liquidation. Data requirements will change en route. Workflow controls and automation will need to be implemented to reduce human errors, manual processes, and to improve data quality for the life span of the various products.

Establish data master consistency as your data model develops

The product master needs, of course, to be synchronised with the security master, which will have additional information and attributes for portfolio- and order management. This consistency will avoid data duplication and will add another level of granularity. For post trade processes, the product master will interact with investment- and accounting book of records, risk, performance measurements and -attribution, compliance, and regulatory frameworks, reporting and governance. These masters need to work independently and – at the same time - in conjunction to support the demands of a modern, global, and data-driven asset manager. We expect reduced operational cost, better data quality, increased transparency, more efficient sales enablement and at the end of the journey a truly competitive product portfolio in a an increasingly demanding and competitive market.

Toward a holistic, integrated data operating model

This is a step-by-step process, and in this specific case it is very much a work in progress.

We are already seeing the benefits from component-based consistency as part of the journey toward a holistic, integrated data operating model. Systems change, market requirements evolve, and organisation adapt and develop as part of the journey. It starts and ends with data. Change is the new constant. Data never sleeps.

About Fencore

Conclusion

A Product Master is more than just a repository of product data; it is a strategic tool that, when correctly integrated, can significantly enhance fund reporting, regulatory compliance, strategic decision-making, and general data accessibility. By focusing on data quality, leveraging modern integration technologies, customising data access, and fostering a culture of continuous improvement, investment management firms can unlock the full potential of their Product Master, driving operational excellence and strategic growth.

Product Master Series

This is the first weekly article in a series focussing on implementing a Product Master. The articles focus on the following topics:

Scope of the Product Domain
Product Master Operating Model
Downstream Integration
Workflow and Mastering Interaction
Building a Business Case

Subscribe for email updates on this Product Master series

We will only use your email to send product master series updates unless otherwise agreed.

We listen to your needs

We understand your challenges

We provide solutions

We help with implementation

The post Product Master Series – Downstream Integration appeared first on ISC.

Product Master Series – Operating Model

Neer Gandecha — Thu, 13 Jun 2024 12:48:59 +0000

Designing the Operating Model for your Product Master

The journey to achieving a successful Product Master in investment management hinges not just on the technology or data involved but critically on the operating model that underpins it. The design of your operating model is a fundamental decision that affects how data is managed, updated, and utilised across the organisation. This article explores key considerations and best practices for designing an effective operating model for your Product Master.

Understanding the Operating Model

An operating model for a Product Master refers to the framework and processes that govern the collection, maintenance, and distribution of product data within an investment management firm. It includes decisions on data governance, roles and responsibilities, and the operational processes that ensure data accuracy, consistency and accessibility.

Key Considerations

Centralised vs. Decentralised Models: The first decision point is whether to adopt a centralised or decentralised approach to data administration. A centralised model pools data management responsibilities within a dedicated team, ensuring consistency and control. In contrast, a decentralised model distributes these responsibilities across different departments, which can enhance responsiveness and specialised knowledge but may risk data inconsistencies.

Data Governance: Effective data governance is crucial, involving setting standards for data quality, access controls, and compliance. This includes defining who can add, modify, or delete data within the Product Master and under what circumstances.

Roles and Responsibilities: Clearly defined roles and responsibilities are essential to avoid overlaps and gaps in data management processes. This includes appointing data stewards, owners, and users, each with specific duties and accountability for the Product Master's data integrity.

Operational Processes: The operating model must outline the processes for updating, validating, and distributing product data. This involves establishing workflows for regular data reviews, updates, and audits to ensure ongoing data accuracy and relevance.

Best Practices

Start with a Clear Strategy: Before deciding on an operating model, have a clear understanding of your firm's data management goals, the regulatory environment, and how the Product Master will serve your strategic needs.

Engage Stakeholders: Involve key stakeholders from across the organisation in the decision-making process. This includes representatives from operations, technology, and business units who will use or contribute to the Product Master.

Invest in Training: Successful implementation requires not just the right model but also ensuring that staff understand their roles within it and are committed to maintaining high data quality standards.

Leverage Technology: Leveraging the right technology (including workflow tools, which we will talk about next week) can support and enhance the chosen operating framework. This includes using data management platforms that facilitate centralised control or support decentralised collaboration, as needed.

Regular Review and Adaptation: The operating model should be reviewed regularly to ensure it continues to meet the firm's needs and adapts to changes in the data landscape.

GoldenSource's Approach GoldenSource Case Study About GoldenSource

GoldenSource's Approach

GoldenSource aids in effective operating model design for implementing a Product Master by providing a comprehensive and flexible data model that ensures consistent and accurate data management. Their solutions streamline data ingestion, validation, and enrichment processes, creating a reliable "golden copy" of data. This centralized approach enhances data governance, integrates seamlessly with existing systems, and supports regulatory compliance by delivering high-quality, transparent data workflows.

GoldenSource's Product Master data management integrates scattered data across various sources into a single, coherent framework. This integration is facilitated through customizable workflows and robust data governance standards, which maintain data integrity and security. By automating data management tasks, GoldenSource reduces manual effort, minimizes errors, and ensures timely data availability, enabling businesses to make informed decisions swiftly

GoldenSource Case Study

About GoldenSource

GoldenSource helps you surmount the data challenges you face every day.

We help you through exploding volumes of data, regulatory obligations, disjointed legacy systems, and the complex demands of data-driven business models to achieve digitization and automation.

Our solutions give you an actionable understanding of the relationships between legal entities, issuers, counterparties, customers, securities, products and transactions – and much more. You get to deliver the gold standard of data when and where it’s needed.

https://www.thegoldensource.com/product-master-data-management/

Conclusion

Designing and implementing the right operating model for a Product Master is a complex but essential task. It requires a strategic approach, careful planning, and ongoing commitment to data governance principles. By considering the factors outlined above and adopting best practices, your firm can establish a robust operating model that supports effective product data management that drives your business forward.

Product Master Series

This is the first weekly article in a series focussing on implementing a Product Master. The articles focus on the following topics:

Scope of the Product Domain
Product Master Operating Model
Workflow and Mastering Interaction
Downstream consumption
Building a Business Case

Subscribe for email updates on this Product Master series

We will only use your email to send product master series updates unless otherwise agreed.

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The post Product Master Series – Operating Model appeared first on ISC.

Product Master Series – Scope

Neer Gandecha — Wed, 12 Jun 2024 12:41:09 +0000

Deciding the scope of your Product Master: Beyond a simple list of funds?

One of the pivotal decisions firms face in implementing a product master is defining the scope of their product master, this boils down to roughly two questions – what is a product, and what product features would we like to master?

What is a product?

You will need to define carefully what a product is to your organisation. As you start engaging with stakeholders you may be surprised at how varied views may be – you will hear definitions of a product of anything from a fund, its share classes, to the strategy the fund follows.

To help define what a product is, it can help to produce and examine "use cases" within your business. You will probably have to decide if (and on what conditions) a segregated / separately managed account or an advisory account is considered a product.

What should be mastered?

You will likely encounter stakeholders who envisage the scope of a product master as a simple list of funds or product strategies, through a broader spectrum including umbrellas, disclosures, product strategies, distribution strategies, pricing rack rates, country of registration tables, and more.

The decision on the scope of the product master should be driven by several key factors:

Technology Infrastructure: Existing IT systems may influence the scope of the product master, if there is already a core data master management solution in place there will be a classic choice of whether to extend the existing master data management solution or to build a new system and integrate as needed.
Regulatory Requirements: Compliance needs can dictate the level of detail and types of data that must be readily accessible, often necessitating a broader scope.
Strategic Goals: The firm’s strategic direction may require a comprehensive dataset that includes detailed product strategies, pricing, and disclosures to support decision-making processes.
Operational Capabilities: The firm's ability to manage and maintain a more extensive product master should be considered, balancing the benefits against the administrative overhead. We will delve further into this topic next week.

Fundipedia's Approach to Data Masters Fundipedia Case Study About Fundipedia

Fundipedia's Approach to Data Masters

Since 2007 Fundipedia has been on a mission to make managing fund product data easy. We firmly believe that the best way to do this is by establishing a fund product data master and that to build one effectively, fund product data has to be treated holistically across its entire lifecycle. This means that from the very first spark of an idea through to end of a fund’s life (whether that is in the form of a final pay-out at maturation, a merger with another vehicle or a wind-down and liquidation) all fund product data – from identification and system codes to investment objectives and ESG disclaimers to the names of the board of directors etc etc – must be captured, stored centrally and made readily available to those who need it. It is this understanding of what data is needed by whom and for what purpose that is the key to setting up an effective product master. This is a complex undertaking and requires intelligent systems backed by experts who truly understand both the software and the product perspective. Very few companies have both of these skill sets in house and are increasingly turning to SaaS.

Fundipedia Case Study

Fundipedia is the first and only fully agnostic data management platform operating in this area and we have implemented fund product masters for multiple asset managers and servicers. To illustrate our approach and the benefits delivered, we have included a short case study below.

The challenge

A global asset management company with assets of over USD 630 billion relied on an external provider to manage product data and to produce data feeds and regulatory reporting. They identified a business risk due to data errors, low speed of data provision and increasing regulatory demands for data. They were also facing rapidly growing costs.

They decided to replace the external provider with a flexible, agile and scalable in-house product master whilst respecting budgets, improving data quality, meeting increased regulatory demands and ensuring continuity.

They wanted to give autonomy and control over data to individual teams across the global entities. The ability to interface with internal and external stakeholders, and to support information transfers, bulk loading, regular reporting and data quality monitoring was a mandatory requirement.

The implementation

Following a comprehensive RFP process and proof of concept study, Fundipedia was selected. In order to minimise disruption and to ensure ongoing global business operations, our project team employed a phased approach, conducting continuous testing and validation throughout. The solution was delivered on time and within budget.

The benefits

Fundipedia has delivered:

an agile and scalable product master giving autonomy and control over all product data for all funds, irrespective of domicile and legal structure.
standardised and consistent product data at all levels of the business enabling global oversight.
an intuitive and user-friendly interface, giving rights-based access to a single source of product data globally and across all levels of the business.
oversight and transparency of data quality of all dynamic data (NAV, dividend, holdings, etc.) generated by third-party administrators.
automated, intelligent data dissemination and quality checks.
powerful user-rights based reporting functionality enabling easy creation and sharing of data across all products.
oversight of data usage and external dissemination.
integration with up and downstream systems and providers.
automated collection and delivery of accurate data using open application and data integration standards.
automated reconciliation of fund data sent to third parties such as Bloomberg, Morningstar and FE.
robust and secure platform meeting all the client’s internal cybersecurity requirements.
ongoing support and enhancements with 24/7 Omnichannel support.

Fundipedia has a long history of on boarding clients looking for product master solutions and we are extremely proud that all these clients are still with us. It helps that we were the first to realise that fund product data could (and should) be industrialised and, based on our wide experience, we have developed fast implementation methodologies that are minimally disruptive. We passionately believe that getting fund product data management right is the key to tomorrow’s innovations in a fully digital world. To find out how Fundipedia’s solutions can help you achieve this, please reach out to us.

About Fundipedia

Conclusion

Choosing the scope of your product master is a strategic decision that has far-reaching implications for your firm's operational efficiency, regulatory compliance, and ability to innovate. Whether opting for a basic list of funds or a more comprehensive dataset that includes data like disclosures, pricing, and distribution strategies, the key is to align the scope with the firm's strategic objectives, regulatory obligations, and operational capabilities.

Product Master Series

This is the first weekly article in a series focussing on implementing a Product Master. The articles focus on the following topics:

Scope of the Product Domain
Administering a Product Master
Workflow and Mastering Interaction
Downstream consumption
Building a Business Case

Subscribe for email updates on this Product Master series

We will only use your email to send product master series updates unless otherwise agreed.

We listen to your needs

We understand your challenges

We provide solutions

We help with implementation

The post Product Master Series – Scope appeared first on ISC.