By Ken Akoundi
“Ignoring facts does not make them go away.”
— Fran Tarkenton
Technologically speaking, something has happened in the last few years. The long-term investor community has gone through a shift: they are upgrading their investment office technology out of the 1990s into the 2010s. What does this mean for asset managers and service providers? This paper focuses on the changes and the way it has and will continue to affect their interaction with their investors (LPs).
The process of seeking a long-term investor’s (LTI) capital, especially for private investments, is an archaic and non-transparent process that has not seen much change over the last 20 years. Before one can understand the way it will be affected by the new changing technology, one has to understand the type of information that is exchanged. This table lists all the different document types that are passed along, with the phase of investment they apply to. The phases are broken down into pre- and post-allocation and post redemption.
Some of this information (listed in the first column) may seem trivial to GP pros. While marketing, research, or even position level transparency are easy to understand, the bottom seven categories in the table need a bit of explanation.
Most investment offices monitor their managers through public channels, including information on public websites (e.g., via Google searches, Facebook, etc…), and government sources (e.g., SEC.gov). The information-gathering also extends to face-to-face meetings, “calling your trusted circle of CIOs”, behavioral clues, body language, and interaction in public settings (e.g., conferences).
Information, flows, and technologies: pre-2014
Now that the type of information is defined, we need to better understand the pathways of information. The diagram below depicts the flows of information and the cast of characters.