Automating AUM Reporting: Reducing Risk and Improving Efficiency with Technology Solutions

Mutual funds, ETFs (Exchange Traded Funds), and other collective investment schemes are gaining popularity quickly. AMCs (Asset Management Companies), ETF providers, stockbrokers, and other financial institutions must adapt to the increasing number of investors. The major challenge for AMCs is to monitor the performance of assets managed on behalf of clients. As the size of a mutual fund or ETF increases, tracking the performance of assets becomes challenging. Financial institutions implement strict AUM reporting strategies to track the performance and growth of assets. There has been an increasing demand for automated AUM reporting solutions in the past few years. Continue reading to understand how automated AUM Reporting can reduce risks and improve efficiency.

Understanding AUM and AUM Reporting

It is essential to understand the meaning of AUM (Assets Under Management) before delving deeper. AUM refers to the total value of the assets managed by a financial institution on behalf of its clients. Let us say an AMC operates a small-cap mutual fund scheme. The mutual fund consists of stocks of diverse small-cap companies. The AUM for the mutual fund scheme will be the total value of all stocks in the portfolio. The AUM remains dynamic because mutual funds and ETFs add or remove assets at regular intervals. AUM also represents the size of the mutual fund or ETF scheme in terms of portfolio value.

AUM Reporting is an essential process for AMCs, stockbrokers, and other financial institutions. It is the process of monitoring, analyzing, and presenting AUM insights. Analysts keep a tab on all the assets under management, their price fluctuations, and other factors. These insights are reported to the management at regular intervals for informed decision-making. Legacy AUM reporting systems are constantly failing to manage the increasing portfolio size. It is where new-age reporting solutions come into the picture for financial institutions.

Automating AUM Reporting: Understanding the Pros

AUM reporting processes can be automated in today’s era with the help of digital solutions. Here’s how technology can help automate reporting processes to improve efficiency:

Effective Data Collection and Integration

Analysts cannot create efficient reports without abundant data. AUM data is obtained from various sources. Technological solutions can help automate the data collection process. For instance, a stockbroker might facilitate its customers with numerous collective investment schemes. In such a case, the stockbroker will collect AUM data related to different schemes. Manual data collection will require loads of time, thus delaying AUM reports.

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Automating the data collection process is only the first step for an organization. The idea is to store the data collected from different sources into a centralized platform. New-age data management solutions can help organizations store data in a centralized platform for a unified view. Analysts can generate rich insights when they view the data as a whole.

Real-Time Performance Tracking

Technological solutions enrich the reporting process by providing real-time insights. A new-age reporting tool will provide real-time visibility into the performance and value of assets under management. As discussed above, AUM is a dynamic factor. It can change according to price fluctuations of assets in a mutual fund or ETF scheme. Since AUM is a dynamic factor, reporting processes must be able to adapt to changing values. The management can make better decisions when AUM reports incorporate real-time values and insights. It allows an organization to react to changing market conditions, price fluctuations, and investor demands.

Enhanced Scalability

Asset managers, brokers, and other professionals can create effective AUM reports for a small mutual fund or ETF scheme. However, the real challenge arises when the asset under management increases. Manual reporting is not effective when the size of collective investment schemes increases. It is where new-age reporting solutions can help organizations. These digital solutions can adapt to changing portfolio values and accommodate new assets.

Enhanced Regulatory Compliance

AUM reports are subjected to certain regulations in every jurisdiction. For instance, AMCs are required to present frequent reports to stakeholders in some jurisdictions. Similarly, there are regulations related to data collection and reporting. In-house employees might struggle to remain compliant due to the burden of manual reporting processes. On the other hand, automated reporting solutions can ensure regulatory compliance without any interference from in-house employees.

Customized Reporting

New-age reporting solutions can help create customized reports as per the preferences of stakeholders or investors. For instance, a new-age reporting tool can help analysts include custom performance metrics. Similarly, the format and layout of AUM reports can be changed as and when required.

In a Nutshell

AUM reporting is an essential process for AMCs, brokers, and other financial institutions. Legacy reporting solutions cannot handle the increasing portfolio and asset size. It is where new-age reporting tools powered by automation technologies can help asset managers and brokers. Firms can also look for third-party support to automate their AUM reporting processes. Start automating AUM reporting processes now!

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