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The data behind the review: why good investment manager data matters to trustees

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Why the depth of data a manager provides is the ceiling on the oversight a trustee can perform

4 mins
Topics
Connect & Data Connect Monitor
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Author
tom-wiseman

Tom Wiseman

CEO

Tom is the Chief Executive Officer of Enhance Group overseeing our multi-jurisdictional Monitor and Select solutions from our Jersey headquarters.

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Investment oversight is only ever as good as the data it’s based on. Trustees who appoint investment managers without testing what data those managers will share are quietly fixing the ceiling on their own governance. This article explains what full holdings and transaction-level data unlocks for the trustee, what remains possible (and what does not) when only PDF statements are available, the practical questions trustees should ask at appointment, and how Enhance closes the data gap over time at no cost to either side.

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Why your manager’s data architecture is a trustee concern

The wealth-management industry still contains a long tail of investment managers that cannot, or will not, provide automated data feeds to third parties. Some have legacy systems; some treat client portfolio data as a competitive asset; some are willing in principle but slow in practice. The result is a spectrum. At one end sit managers who deliver clean, standardised holdings and transactions data into Connect every quarter, ready to be reconciled, mapped to the trustee’s framework and reviewed by an Investment Analyst. At the other sit managers who issue PDF statements and nothing else, leaving the trustee’s independent monitoring service to extract what it can from the manager’s own document.

For trustees, this is not a technical detail. The depth of oversight a trustee can perform is bounded by the depth of data the manager will share. A trustee appointing a manager who cannot or will not provide automated holdings and transaction-level data to an independent monitoring service is appointing a manager whose performance can only be tested at the level the manager chooses to report. That may be acceptable, but it should be a deliberate decision made with the constraint understood, not an accident discovered at the first quarterly review.

What ‘full data’ actually means

Full holdings and transaction-level data is an automated feed that delivers, for every portfolio, the complete list of securities held, the units and valuation of each, every transaction processed (purchases, sales, dividends, interest, corporate actions, fees and cash movements) and the relevant reference data. It is the same data the manager uses internally to produce its own report; the difference is that Connect receives it directly, verifies it independently and standardises it. PDF statements are designed for human reading rather than machine processing: holdings are summarised, transactions netted, cost basis may not appear at all.

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How a manager’s data provision shapes trustee oversight

The three pillars below capture what changes between a portfolio with a full data feed and a portfolio with PDF statements only, and what Enhance does about it over time.

01 Full

What holdings and transaction-level data supports

With holdings and transaction-level data, the full Monitor review proposition is available. Mandate compliance can be tested against every parameter the IPS sets out (see IPS: a practical guide): allowable asset classes, position limits, concentration ceilings, currency constraints and tax-driven restrictions. The Enhance rating, the allocation X-ray, concentration analysis, drift detection, drawdown measurement and currency exposure testing all run at full depth. Action points across all three categories (administration, suitability and technical) can be generated, and Connect bookkeeping data is available for automated accounting. This is the proposition Enhance was built to deliver.

02 Partial

What is preserved, and what is lost, with PDF-only

Where only PDF statements are available, Enhance can still onboard the portfolio and produce a Monitor review. The PDFs are read, the data extracted, the headline figures validated against the manager’s commentary, and the review built at the level of detail the statement supports. The independent assessment, the Enhance rating, mandate compliance against disclosed parameters and the suitability and administration action points all remain available. What is lost is the deeper layer that needs security-level data: holdings concentration below the manager’s summary, transaction-level reconciliation, and granular drift, currency, drawdown and risk analysis.

03 Progress

How Enhance closes the gap over time

Enhance builds data feeds with any investment counterparty at no cost to the trustee or the manager. We already maintain feeds with hundreds of counterparties globally, and we add to that network constantly. When a trustee onboards a portfolio with a PDF-only manager, we treat that as a starting point rather than an end-state. The Governance Manager, in support of our Data & Automation Team, engages with the investment manager to encourage and facilitate an automated feed. Where the gap can be closed, we close it. Where it cannot, the trustee knows the boundary and factors it into appointment decisions for new mandates.

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What to ask of investment managers at appointment

When you are considering a new manager appointment, add a small set of data questions to your standard due diligence on style, track record, fee structure and regulatory standing. Five questions cover the ground:

  1. Can the manager provide automated holdings and transaction-level data feeds to your independent monitoring service, at no cost to you?

  2. If not currently, is there a path, and is the manager willing to engage with Enhance on building one?

  3. What is the manager’s documented policy on third-party access to the portfolio data you have commissioned from them?

  4. What is the frequency and format of the data the manager can share?

  5. Who at the manager owns the data relationship?

The right answers do not automatically rule a manager in, and the wrong answers do not automatically rule them out. Other factors matter, including track record, mandate fit and regulatory standing. But the questions need to be asked and the answers recorded. A manager who refuses to share holdings and transactions with the trustee’s independent monitoring service is one whose appointment will constrain trustee oversight for as long as the relationship continues.

The bottom line

The data a manager can share is the ceiling on the oversight you can perform. Full holdings and transaction-level data enables the full Monitor review proposition, including bookkeeping-grade data ready for automated accounting. PDF-only relationships remain workable, with Enhance preserving the independent review and engaging with the manager to pull them toward a data feed over time. Either way, you should know what you are getting, what you are not, and whether the gap is consistent with your fiduciary responsibilities.

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