What is a Portfolio Management System?

And why do you need one

A Portfolio Management System, also known as a PMS, is a single system that tells you all about your investment portfolios, and increasingly, more about your business.

From a portfolio perspective below are the things that you'd expect a Portfolio Management System to provide:

  1. Capital activity - This includes when and how much money the portfolio received from investors
  2. Investments - All trades and investments made over time along with cost basis and present market value and breakdown of P&L and income whether or not a position exists in a portfolio
  3. Trade vs Settle Date Positions - Available cash and investment positions on a cash basis or accrual basis to know exactly where cash is held up
  4. Expenses - Any expenses that the fund incurred ideally tracking to a chart of account that provides the detail of each expense
  5. Fees - How much management fees and incentive fees did the fund charge overtime
  6. NAV - Net asset value of the fund month by month along with balance sheet, statement of income and cashflows and other financial statements
  7. Performance and Attribution - Returns of the fund over time on a monthly basis and attribution of returns by investments, sector, asset types, strategy etc.
  8. Projections - Cashflow projection indicating money tied up to certain deals due to settlement delays

In addition to giving you information about your funds and what's happening inside those funds a PMS should also provide information outside the fund. The outside of the fund consists of the General Partner (GP) and the Limited Partner (LP). Naturally, a PMS system would therefore extend to provide:

  1. Investors - List of LPs and GPs in the fund and what percentage of the fund they own
  2. Capital Registry - Capital account balances for each investors along with their subscription amounts and commitments in the fund
  3. NAV allocations - Allocations of NAV to individual investors
  4. Fees - Two primarily fee types are management fees and incentive fees that the fund needs to calculate individually for each investor based on LPA agreements
  5. Diversification and Risk - How diversified the clients are and which ones possess key risk to the business and therefore needs to be paid extra attention to
  6. Statements - Generate statements if the fund is self administered
  7. Contact Management - Although not a traditional task being able to manage prospect and sales pipeline and when a prospect becomes an investor provides great synergies without needing spreadsheets or additional systems

Funds these days deal with several third parties and in order to operate your business properly you can expect a PMS to be able to record various vendors and expenses related to your funds. For example, prime brokers, fund administrators, auditors, lawyers and other third party service providers. Some service providers routinely provide data feeds that are related to funds like trade confirmations from prime brokers and NAV and capital registry files from fund administrators. Being able to visualize these data files in a PMS using a data warehouse function and immediately being able to reconcile inhouse records to these data feeds further automates some back office activities related to funds.

OpEff Technologies - Mission Statement

OpEff Technologies was founded in 2012 with the mission to revamp the technology stack of the alternative investment industry. In addition, it has strived to bring this stack to the latest generation of cloud computing and a true, web based user experience while consolidating and simplifying the operations technology suite. OpEff has partnered with leading investment management firms and pioneered the first ever web based portfolio accounting and waterfall allocation system. Our breakthrough technology features a-la-carte modules that include:

  1. A fund accounting and reporting system with realtime general ledger, financial statements and expense allocation
  2. A waterfall allocation system for hedge funds and private equity structures, with investor liquidity & capital management, fee calculations and integrated CRM
  3. A data warehousing and reconciliation system to automate transaction and position recs against fund admin and PB recs
  4. A tax accounting system to convert book income to tax and allocate amongst partners using aggregate or waterfall methodology in both standard hedge fund structures as well as more complex private equity structures

The technology is complemented with outsourced back office and operations services to handle shadow reconciliations and other administrative functions to provide a true one stop shop experience for our clients. Contact us to learn more about our mission, technology and services.

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