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Portfolio > Alternative Investments

Reporting on Alternative Investments in HNW Portfolios

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When it comes to alternative investments, we’ve seen a lot of tumult and upheaval over the past few years. The role of these investments in the financial crisis of 2008-2009 is well known, and in many quarters, alternative investments are still tainted and held in disrepute.

For today’s financial advisor, it’s not necessarily a case of passing judgment on this type of investment vehicle. Rather, it’s a matter of processing our collective knowledge of how the markets reacted in the past, reappraising opportunities and risks, and where appropriate, incorporating alternative investments into investors’ portfolios. The fact is, even though the popularity of alternative investments declined after the financial meltdown, they have started to make a comeback—and high-net-worth investors are once again exploring how they fit into a forward-thinking investment strategy.

After all, depending on an investor’s objectives, liquidity concerns, level of sophistication, and timeframes—alternative investments may make a lot of sense. They can add great value and diversification to a well-constructed high-net-worth portfolio. To this way of thinking, there’s no sense in throwing the baby out with the bathwater.

So Many Products, So Many Sources of Data
Until the crisis of 2008-2009, the primary vehicle for alternative investment strategies were LPs (limited partnerships), also known as hedge funds. However, circumstances have changed since that was the case. Certainly, with the resurgence, direct investment in LPs is still strong. But now, guided by advisors like you, investors are often opting for mutual funds or registered products to fulfill their alternative investment strategies. So…instead of monies going into multi-strategy funds of funds (FoF), they end up in a more liquid, more highly-regulated vehicle—the trusted money market fund.

As you know, collecting data on these funds—and reporting on it—are often not simple tasks. The data often comes from many sources, and frequently, the personnel at advisory firms are forced into arduous, time-consuming manual data entry to get the job done. This costs your firm time and money and significantly increases the burden of providing accurate, updated reports.

The Data Aggregation Solution
Fortunately, there’s a way to ease the burden. It’s with data aggregation. By giving your firm the capability to electronically access data from many of the mutual funds in question, you eliminate the cost and squandered time of manual data entry. And you maximize the ease, efficiency and timeliness of your reporting processes and output.

Let’s face it. Alternative investments are still very much in play, and will likely remain so. It makes sense to find a sensible, scalable way to incorporate them seamlessly into your reporting structure—precisely what data aggregation allows you to do.


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