Investment Reporting:
Staying on Top in the New Era

Investment Reporting: Staying on Top in the New Era

Investment Reporting:
Staying on Top in the New Era

January 2023

Facing increasingly complex investments, regulatory requirements and stakeholder demands, new technology can help asset owners meet the needs of both internal and external stakeholders.

Asset owners require comprehensive oversight of their investments to manage and report on risk and return profiles. This critical reporting provides regular updates to executives, governing boards, regulators and stakeholders in a manner that is easily understood by all. As investment strategies increasingly become more complex, compounded by elevating geopolitical risks and rising reporting demands, technology can play a pivotal role in ensuring asset owners’ reporting capabilities keep pace.


Today’s Reporting Processes and Challenges


Formal stakeholder reporting was introduced a few decades ago and nuances exist across the asset owner landscape. To further explore how reporting has evolved, BNY Mellon examined the internal stakeholder reporting of 50 global asset owner clients and found interesting variations in terms of asset owner type and region. These include:

  • Pension funds manage assets in relation to pension liabilities whereas sovereign wealth funds are particularly alpha driven.
  • European asset owners require more insights on the impact of their sustainable investments driven by legislation such as the Sustainable Finance Disclosure Regulation (SFDR). This is not a requirement yet in the U.S. or APAC.
  • Sovereign wealth funds prefer an in-house solution to comply with their data secrecy requirements, whereas pension funds tend to outsource the responsibilities to their fiduciary manager or custodian.

While variations exist in the reporting requirements and production processes, the data requirements are consistent across asset owners. Data is mainly ex-post and combines investment accounting, performance, risk and compliance metrics. Forward looking ex-ante views are rare. The following data points are common in most reporting:

 General  Market and economics insights
  • Trailing time periods – annualized and cumulative
  • Cumulative return since inception
  • Policy comparison
  • Peer group comparison
  • Asset growth 
  • Performance attribution and turnover
  • Change in net asset value
  • Cash flow analysis
  • Fees and expenses
  • Fiduciary/program oversight 
  • Investment guidelines monitoring
  • Asset allocation versus policy and drift
  • Allocation changes from time A to B
  • Stocks – allocation, return, contribution and weight vs. benchmark
  • Sector – performance, allocation, attribution
  • Geographical:
    • Region/country - performance, allocation, attribution
    • Currency - performance, allocation, attribution
  • Ex-post – portfolio vs. benchmark
  • Liquidity/commitment/capital calls/unfunded/distributions 
  • Liabilities/funding ratios

Based on the research, there are four key challenges to stakeholder reporting. These include:

  • Disparity of data sources (systems, providers) – Required data for stakeholder reporting is held within different data sources, often with different providers, and in some instances, subject to licenses and additional fees. Tracking of data, data consistency and integration (interfacing) are additional challenges.
  • Data immediacy (frequency and speed of reporting) – While quarterly/monthly reporting has been the standard, the reporting frequency is moving towards daily and even real-time.
  • Customization of reporting – Content, formatting and branding of reporting are unique to each stakeholder (e.g., individual pension members, investment committees, political or societal stakeholders). There is no standard in the market to date.
  • Data enrichment – Asset owners are looking for ex-ante and ex-post insights, inclusion of sensitivities and often require the report in their local language. They are seeking annotations to explain deviations and risks, to assess market conditions and trends, and to define impact. The narrative should provide clear action plans and forward-looking views.

In addition, the following observations were made:

  • In times of crisis, asset owners are increasingly demanding “flash reports” to immediately obtain insight into specific asset exposures and related risks.
  • Most asset owner investment reporting is conducted using physical copies, although increasingly, the use of electronic devices such as tablets are becoming more popular.

Combining these observations, asset owners could face daunting challenges when asked to deliver more frequent and digitally native reporting, when the data foundation is not aligned to support. Unsurprisingly, “Data analysis/quality tools” was flagged as the most important item by asset owners in what they consider key to helping improve their daily reporting analysis tasks (see Figure 1).

Figure 1: What are the key  items  for improving your daily reporting analysis tasks? (On a scale of 0 to 5, where 0 = not important and 5 = very important)

What are the key  items  for improving your daily reporting analysis tasks?

Source: BNY Mellon 

In addition, asset owners revealed that “New Investment Reporting Needs” is their top reporting priority over the next three to five years. They are specifically looking for additional reporting data sources such as economic, actuarial and liquidity data, as well as graphical presentations and flexibility. “Data Exploratory Analysis Capabilities” and “Connectivity to Third-Party Business Intelligence Tools” are the other two top reporting priorities that asset owners are looking for (see Figure 2).

Figure 2: What are your top three reporting needs for the next 3-5 years?

What are your top three reporting needs for the next 3-5 years- Charts

Source: BNY Mellon 

Enhancing the User Experience: A Call for New Technology


Asset owners face rising data challenges associated with content, complexity and timing. To cope with that, they are adopting new technology either directly or through their outsourced service provider across three levels:


  1. New data management solutions

    As mentioned earlier, asset owners are adopting new data management solutions to capture and bundle investment data from multiple disparate data sources. These solutions enable validation and normalization of data and the creation of a single source of truth.

    Data demand is expanding and goes beyond traditional asks. Examples of data types include:

    • Real-time market and economic data directly from third party-sources and news channels
    • Analysis of social media information that provides insight into sentiment
    • Detailed alternatives, private asset data insights leveraging information directly from third-party private equity vendors
    • Environmental, Social and Governance (ESG) related impact/risk data
    • Tokenized assets and cryptocurrencies on chain data
    • Independent peer group analysis via third-party vendors
    • Internal and external managers’ data as asset owners are increasingly changing their portfolio management approach

  2. Improved user experience aided by technology

    As investment objectives and strategy continue to evolve, end users are looking for new ways to consume investment data.

    It is likely that customization in stakeholder reporting will continue to exist to meet diverse user demand. New technology is being introduced to optimize the process and make customization more efficient. This includes:

    • Artificial Intelligence (AI) that supports the ability to produce predictive analysis (e.g., on trade failure) and hence supports forward-looking views on investments.

Leveraging AI to predict real-time trade settlement probability

Portfolio managers want to concentrate their efforts on portfolio construction and allocation in line with their stated mandates. They want to avoid the time-consuming tasks related to actual settlement of the executed transactions as well as prevent penalties and loss of access for certain markets.


To reduce trade settlement risk and avoid unnecessary cost, asset owners that apply an internal portfolio management strategy are increasingly interested in obtaining better oversight of their trade activity, such as the number of failed trades and a view on historical trends, investment markets and specific securities. Currently, portfolio managers can use historical trade analytics to review and investigate root causes of unsettled trades. Having the ability to predict the likelihood of a trade not settling, and highlight the probable root cause, enables the portfolio manager to take timely corrective action thus avoiding penalties, and risk of loss of access.


Leveraging patent-pending AI and machine learning technology, BNY Mellon’s Predictive Trade Analytics can provide real-time probability of trade failure, using historical trade patterns.


"Our capability provides portfolio managers with insight into top trends, such as relative market settlement fail rates and root causes of failed trades,” says Ziad Iskandar, Executive Manager of Advanced Digital Technology team at BNY Mellon. “Our tool delivers early indication of how likely each trade placed will be to settle successfully and determine probability for trade failure dynamically. For example, we can predict the probability of a trade failing to settle early enough ahead of settlement deadline, thus providing an opportunity for the client to take proactive corrective action. This is valuable in Central Securities Depositories Regulation (CSDR) markets where the cost of failure to settle is particularly punitive."


Using APIs, these early signals are reported real-time to the asset owners’ portfolio management team. Key statistics can be included in asset owners’ customized reporting, giving them oversight and the ability to take broader corrective actions, if required.

    • Translation applications that render reporting in the asset owner’s preferred languages.
    • Self-service options, third-party business intelligence tools and interactive visuals that sit on top of a single source of data, enabling exploration and analysis.
    • Application Programming Interface (API) connectivity coupled with solutions that allow for direct interactive data sharing.
  1. Better data enrichment processes

    Using Natural Language Processing (NLP) capabilities, asset owners can more seamlessly produce commentary and analysis of investment results. This can help improve efficiency and quality of reporting.


Build, Buy or Collaborate


Given the need to optimize reporting using sophisticated solutions, asset owners will increasingly approach their outsourcing providers to assist in the assimilation of investment data into a single source of truth and compilation of the required reporting.


Service providers like BNY Mellon are well positioned to support asset owners in their journey, combining data vault, studio, analytical and reporting capabilities.


“Coupling our open architecture platform and data & analytics strategy, BNY Mellon is well positioned to act as the asset owners’ single source of truth”, says Rohan Singh, Global Head of Asset Owners at BNY Mellon. “We can produce the required reporting or provide data extracts to the asset owners’ reporting engine of choice to ensure that they constantly remain in control of their investments.”

Learn more by visiting BNY Mellon Asset Owner Academy, a platform to share bold ideas, insights and learnings to help asset owners stay agile as they transform their operating models.

Anders Reinertsen

Head of Asset Owners, Americas

Carin Looi

Head of Asset Owners, Asia Pacific

Clive Robinson

Head of Asset Owners, Middle East

Xavier van den Brande

Head of Asset Owners, Europe

Marvin Vervaart

Client Solutions Manager, Asset Owners

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