From operational patchwork to a streamlined investment office

Since 2008, SEI has maintained a relationship with a sovereign wealth fund (the Fund) with over $90 billion in assets under management. This case study demonstrates how The Fund was able to utilize our unique capabilities, which are now part of our unbundled CIO solution.

The Fund was looking for a way to streamline data aggregation, reporting and other operations for a complex portfolio of assets.

The Fund relied on its custodian to perform functions beyond its recordkeeping capabilities, such as data integrations and performance and risk analytics while allowing the Fund to maintain its Investment Office. In selecting SEI as a strategic partner, the Fund established a transparent set of books and records, as well as efficient data aggregation, reconciliation, performance analytics and reporting processes.

Challenge: An over-extended investment office seeking operational support

Prior to converting to SEI, the Fund relied on custodian data to create reporting. However, given the complexity of the portfolio, the custodian’s recordkeeping capabilities were not sufficient to meet the Fund’s needs.

The Fund held over 900 positions, with approximately 50% comprised of private equity and hedge fund positions across segregated accounts held by up to 50 managers, creating challenges in data aggregation and reporting. Specifically, processing the private equity and hedge fund positions required manual work, placing a burden on the investment office and creating challenges in data aggregation and gaining transparency across multiple accounts and products.

The Fund wanted to maintain its investment office, but needed a partner with expertise in portfolio accounting, data integrations and performance and risk analytics. This would allow the investment office to focus on setting and managing its investment strategy and asset allocation, rather than being overwhelmed by day-to-day operations.

Solution: Partnering to bridge the gap between providers and technology

At the onset of our strategic partnership with the Fund, we built processes and data feeds between the custodian and investment managers to create an independent set of books and records from which performance and risk analytics could flow. SEI maintains the data in its portfolio accounting software, performing daily reconciliation of cash, positions and transactions between the custodian, investment managers and our security master. This daily reconciliation can ensure accurate data feeds into the reporting platform, our web-based dashboard. The Fund can also access up-to-date and reconciled information on a daily basis through the dashboard. 

Our team uses a flexible ledger for NAV estimates, back-outs and rebooks. For performance, we use two valuation records – the general ledger which is consistent with custodial records and an effective date that uses NAV Estimates. The performance reporting engine toggles between the two records and uses lags to offset the benchmark timing mismatch. 

From an operational standpoint, we provide daily support of the Fund’s private equity and hedge fund assets by processing capital calls, partner statements and distribution statements from fund administrators. Our solution provides a single contact point to consolidate multiple vendors and technology such as custody, data aggregation, risk and performance analytics, reporting and document management. It simplifies the operational interface the Fund relies on.

In addition to the data integrations and the downstream benefits resulting from reconciled data, the Fund leverages SEI’s dedicated client service team for ad hoc reporting support. This creates operational efficiency for the investment office, allowing them to pursue their investment objectives and maintain a long-term focus on their portfolio.

The result: Improved focus on investment strategy and asset allocation

Through SEI’s solution the Fund was able to simplify operations across its complex portfolio and bridge the gap between multiple investment managers and the custodian. Relying on SEI’s infrastructure to build connections between vendors allows the Fund’s internal investment office to leverage a single point of contact for its data, risk and performance analytics and reporting needs, and create a reconciled set of books and records across multiple investment managers. This allows the investment office to focus where their expertise lies – in managing the asset allocation and investment strategy.

Important Information:

This case study describes the attributes of a specific client that SEI has determined is comparable based on objective criteria, including organizational goals, asset size and industry sector. Any discussion of specific asset allocations is intended to help clients understand SEI’s customized investment approach, and should not be regarded as a recommendation. Information concerning SEI’s recommendations over the last year is available on request.

This information is provided by SEI European Services Limited. Statements that are not factual in nature, including opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are subject to change without notice. Nothing herein is intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice.

There are risks involved with investing, including loss of principal. There can be no assurance that objectives can be achieved nor that risk can be managed successfully. Alternative investments are subject to a complete loss of capital and are only appropriate for parties who can bear that risk and the illiquid nature of such investments.