Multi-asset class portfolios sharpen need for tech
Solovis: Best Data Management Solutions Provider – The private equity industry has witnessed a shift to more manager-of-manager and investments in fund structures, all while asset owners and allocators are increasing the percentage of their portfolios invested in alternatives. In view of this, Solovis identified the need for a portfolio management technology platform to help institutional investors with the inherent challenges they face in managing these complex multi-asset class portfolios.
“The Solovis technology platform was designed from the bottom up specifically for multi-asset class portfolio management. All our clients have a large portion of their portfolios invested in these complex investment types, including private equity,” says Josh Smith (pictured), co-founder & CEO, Solovis.
The platform serves as an accurate investment book of record (IBOR) and helps asset owners and allocators collect and aggregate investment data into a single view, analyse the portfolio from any angle or level of detail, and report on and share portfolio information with a variety of constituents and stakeholders.
In the case of private equity specifically, the concepts around unfunded commitment tracking, appropriate call and distribution breakdowns and other considerations unique to the asset class are critical to the success of cash flow forecasting and appropriate benchmarking, performance reporting, attribution and risk. The Solovis platform gives limited partners tools to manage these more effectively, Smith says.
Earlier this year, Solovis launched Solovis Predict – an application designed to help investment teams model future state outcomes of potential investment scenarios. The Solovis Predict application supports J-curve modelling, private equity cash flow projections, a pacing model and simulation of drawdown scenarios, all in an intuitive, easy-to-use interface.
Smith comments: “Our clients benefit from an accurate, near real-time view of portfolio performance. With the Solovis platform, investment teams can drill down into the specifics of their private equity investments and analyse how they impact overall portfolio considerations such as exposure, liquidity and risk.
“The Solovis platform eliminates data inaccuracies and timing lags across investment types, such as private equity data being reported on a 3-month lag. It also serves to break down system and team silos, so private equity investment teams can collaborate more effectively and gain a more holistic view of the overall portfolio to support more informed investment decisions.”
Discussing the challenges the private equity industry faces, Smith says: “From an asset owner/allocator perspective, an effective portfolio management platform should have the ability to directly pull together all asset class types, acting as a central repository for meta data, normalising all incoming investment data to produce meaningful, consistent output on a timely basis. Ideally, the platform will do this without sacrificing the statistics that are relevant to unique investments like private equity and other complex asset classes.
“In addition, most asset allocators are tying together multiple systems in an effort to create a cohesive view of the portfolio. This is also necessitated as a result of hedge funds and other illiquid structures, but private equity is the worst culprit as the timing lags of reported data, restatements of flows, inconsistent valuations, among many other potential issues, create difficulty standardising the asset class, especially in the context of the rest of the portfolio. Solovis solves for this by enabling multiple book of record concepts on a single platform, knowledge dating capability, and consistent operational processes that allow constant reconciliation of information across an asset owner’s world, while also giving each asset class investment team the power to look at data in their own novel ways.”
CEO & Co-founder, Solovis
Josh Smith is CEO of Solovis, a fintech company catering to limited partners and asset allocators. Josh co-founded Solovis in 2013 to fill a gap in the institutional investing industry – the need for an enterprise platform that aligns investment data, teams and processes across a large-scale multi-asset class portfolio. Josh has focused his entire career in institutional finance, including rising positions with Royal Bank of Canada and Investure.