AUM is one of the most important data elements in asset manager databases. Firm, asset class and product AUMs are among the first things database users screen for when they are doing searches, and many database providers rely those numbers to calculate other key search values such as asset flows into and out of the firm and their strategies.
If the data isn’t input as soon as possible after the end of the quarter—or if the values provided raise red flags—asset managers risk being excluded from searches and having their operational integrity questioned by consultants and clients. eVestment, one of the largest global asset manager database providers, reports that databases are now being analyzed three and four days into the quarter.
Now more than ever, the pressure is on asset managers to get their AUM data into manager databases as soon as possible—and to make sure the data they provide is accurate and consistent over time.
Here are 3 things asset managers can do to ensure timely and accurate AUM data is available in manager databases:
1. Understand how each database defines AUM.
Different databases ask for AUM breakdowns in different ways. It is critical that managers follow each database’s definition to the letter when calculating firm and product AUM. AUM data that does not comply with a database provider’s requirements raise red flags that will exclude the firm from showing up in searches until they are resolved.
Pay particular attention to database definitions for alternative asset classes and resist the temptation to inflate AUM numbers or “double count” strategies in multiple asset class or product AUM calculations. Stay current with database provider updates, as their definitional elements can and do change.
2. Be sure AUM data is accurate and consistent with past AUM data.
Most manager databases use rigorous systems and manual validation checks of key data elements before updated manager profiles are released to users for search activity. AUM receives particularly intense scrutiny because it is used to calculate other search criteria like firm size and growth patterns, fund AUM limits and inflows/outflows to individual strategies. In particular, databases look for outliers, and large fluctuations and inconsistencies over time. Until deficiencies are addressed and/or corrected by the manager, their data will not be available for searches.
3. Provide AUM data as soon as possible.
Having AUM data ready to go ahead of database deadlines greatly increases the likelihood of being included in as many searches as possible. Yet most managers struggle with getting timely, fully reconciled AUM figures from the back office in time to meet those deadlines. While many firms prioritize performance calculations in their internal processes, it’s AUM, not performance, that consultants and asset owners rely on as a top-tier screen in search activity.
Communication is key. Make sure all stakeholders understand why it is important to have AUM data available as soon as possible, and keep them informed if database definitions and timing requirements change.
Consider automating the process
Automating the process used to populate manager databases can also help improve accuracy, consistency and timeliness of AUM data by eliminating manual errors. Assette, for example, has partnered with eVestment to automatically generate the files a manager uploads to the Omni system.
If you would like to learn more about improving your firm’s chances of being included in asset manager database searches, you might want to read our earlier blog post: 7 Best Practices for Database Success.