You can NAV it all
18 Sep 2023
FundGuard explains why Ultimus Fund Solutions selected their cloud-native Contingent NAV solution, and how their low-touch model is unique to the industry
Image: carballo/stock.adobe.com
Ultimus Fund Solutions is a leading provider of full-service fund administration, accounting, middle-office and investor solutions. It supports the servicing of mutual funds, exchange-traded funds and retail alternative funds, such as tender offer and interval funds, private funds and public plans.
Its commitment to excellence is evident in its investments in best-in-class technology, compliance programmes, organisation-wide cyber security efforts and its team of seasoned professionals.
Boutique service levels have always been a critical aspect of Ultimus’ value proposition to its asset management clients. Therefore, when its clients began asking for additional daily oversight and the capabilities of an independent net asset value (NAV) contingency system, to mitigate possible risks, Ultimus needed to find a partner that could enhance its fund administration service offering while housing a technology-enhanced solution for shadow NAV monitoring.
After a careful review process, Ultimus chose FundGuard’s cloud-native, AI-powered, ultra-low-touch contingent NAV solution. It offers a completely SaaS accounting-based NAV, with a fully-matching NAV accounting-based solution. It is also ready to invoke as a primary accounting system if the primary fails.
Searching for a solution
Contingent NAVs are the most comprehensive solution to NAV resiliency, as they rely on the deployment of a second mutual fund accounting system that is separate and distinct from the primary accounting book of records (ABOR), and can be operated by the primary fund accounting service provider, the fund sponsor or another third-party service provider.
This approach requires the daily processing of all executed security trades with full income and amortisation accrual accounting, corporate actions, daily pricing, profit and loss reporting as well as an integrated general ledger to produce financial reports to fully support a contingent NAV.
It was imperative for Ultimus to find a contingent NAV solution that could offer a very low-touch operating environment to eliminate any ‘double work’ by its asset servicing team and their clients. It initially looked at existing indicative net asset value (iNAV) solutions that measure the intraday NAV of an investment, but none could offer a contingent NAV that could be relied upon in the case of extended outages.
Why Ultimus chose FundGuard
Ultimus saw a like-minded, innovative technology partner in FundGuard. FundGuard’s innovative approach to the market offered a uniquely low-touch model that operates in real time and requires little to no manual intervention, other than the final comparison between contingent NAVs and primary ABOR NAVs. This ‘autonomous’ NAV approach eliminates the operational burdens for a secondary accounting team to maintain a back-up.
Ultimus’ CEO Gary Tenkman describes what FundGuard brought to market as “innovative solutions and first-to-market technology that many other service providers don’t have in a contingent NAV solution”.
The FundGuard Contingent NAV solution allows Ultimus to offer its clients additional services to calculate real-time contingent NAVs for their registered funds. It also offers subscribing clients the option to shadow NAV monitor as an oversight to their daily NAV calculation process.
The results
When utilising this service, Ultimus operates a nearly no-touch contingent NAV operating model with a seamless daily exceptions review that requires very little day-to-day intervention. FundGuard data inputs are not reliant on any primary system data and the platform enables Ultimus to maintain a full set of data quality controls within the FundGuard platform. The controls can be switched on when FundGuard needs to assume a primary accounting role.
When invoked as a contingency, FundGuard finishes the day by reconciling its outputs to the primary system’s final outputs, enabling a seamless return when the primary system is fully operational.
Ultimus and their client, Diamond Hill, recently drill tested the FundGuard contingent NAV in a live situation. Diamond Hill chose a day in the middle of the week (within normal processing hours) to ‘bifurcate’ and run through the calculations in real-time (not after hours). During the test, Diamond Hill compared 30 NAVs, and measured the difference between FundGuard and their actual NAVs.
According to Gary Young, Diamond Hill Capital Management’s chief compliance and risk officer, the results showed that 28 of 30 NAVs were exactly the same, and the other two were only off by one penny per share due to rounding — a result of minor data differences. “This was extremely good and accurate in my opinion,” he notes.
Remarking on the reliability and efficiency of the solution, Brian Lutes, senior vice president of fund accounting at Ultimus Fund Solutions, comments: “We’re extremely happy with the accuracy of FundGuard’s NAV calculations and the limited daily interaction from our fund accounting teams.”
Sustainable and future-ready wealth
The investment industry is at a critical crossroads. From climate change and ESG considerations to geopolitical events and cybersecurity, FundGuard believes that unless operational risk is viewed from a systemic and preventative point of view, investor protection will provide little more than a band-aid.
The industry has a responsibility to ensure that wealth is both sustainable and future-ready by addressing foundational risks. Ultimus has long understood this mission and continues to offer innovative technology solutions in service options to its asset managers — particularly those who want to build resilience into their operating models. Ultimus’ selection of FundGuard is indicative of this innovation.
As both FundGuard and Ultimus are proving, asset managers, or their fund administrators, have an option when it comes to NAV contingency solutions — one that takes into consideration accuracy, outage duration and affordability.
FundGuard’s investment accounting platform is a true cloud-native, reliable AI-powered operating system.
FundGuard offers one application with a code line and data model combined.
It includes three out-of-the-box configurations to address three primary use cases: contingency NAV (C-NAV), ABOR and investment books (IBOR).
Its commitment to excellence is evident in its investments in best-in-class technology, compliance programmes, organisation-wide cyber security efforts and its team of seasoned professionals.
Boutique service levels have always been a critical aspect of Ultimus’ value proposition to its asset management clients. Therefore, when its clients began asking for additional daily oversight and the capabilities of an independent net asset value (NAV) contingency system, to mitigate possible risks, Ultimus needed to find a partner that could enhance its fund administration service offering while housing a technology-enhanced solution for shadow NAV monitoring.
After a careful review process, Ultimus chose FundGuard’s cloud-native, AI-powered, ultra-low-touch contingent NAV solution. It offers a completely SaaS accounting-based NAV, with a fully-matching NAV accounting-based solution. It is also ready to invoke as a primary accounting system if the primary fails.
Searching for a solution
Contingent NAVs are the most comprehensive solution to NAV resiliency, as they rely on the deployment of a second mutual fund accounting system that is separate and distinct from the primary accounting book of records (ABOR), and can be operated by the primary fund accounting service provider, the fund sponsor or another third-party service provider.
This approach requires the daily processing of all executed security trades with full income and amortisation accrual accounting, corporate actions, daily pricing, profit and loss reporting as well as an integrated general ledger to produce financial reports to fully support a contingent NAV.
It was imperative for Ultimus to find a contingent NAV solution that could offer a very low-touch operating environment to eliminate any ‘double work’ by its asset servicing team and their clients. It initially looked at existing indicative net asset value (iNAV) solutions that measure the intraday NAV of an investment, but none could offer a contingent NAV that could be relied upon in the case of extended outages.
Why Ultimus chose FundGuard
Ultimus saw a like-minded, innovative technology partner in FundGuard. FundGuard’s innovative approach to the market offered a uniquely low-touch model that operates in real time and requires little to no manual intervention, other than the final comparison between contingent NAVs and primary ABOR NAVs. This ‘autonomous’ NAV approach eliminates the operational burdens for a secondary accounting team to maintain a back-up.
Ultimus’ CEO Gary Tenkman describes what FundGuard brought to market as “innovative solutions and first-to-market technology that many other service providers don’t have in a contingent NAV solution”.
The FundGuard Contingent NAV solution allows Ultimus to offer its clients additional services to calculate real-time contingent NAVs for their registered funds. It also offers subscribing clients the option to shadow NAV monitor as an oversight to their daily NAV calculation process.
The results
When utilising this service, Ultimus operates a nearly no-touch contingent NAV operating model with a seamless daily exceptions review that requires very little day-to-day intervention. FundGuard data inputs are not reliant on any primary system data and the platform enables Ultimus to maintain a full set of data quality controls within the FundGuard platform. The controls can be switched on when FundGuard needs to assume a primary accounting role.
When invoked as a contingency, FundGuard finishes the day by reconciling its outputs to the primary system’s final outputs, enabling a seamless return when the primary system is fully operational.
Ultimus and their client, Diamond Hill, recently drill tested the FundGuard contingent NAV in a live situation. Diamond Hill chose a day in the middle of the week (within normal processing hours) to ‘bifurcate’ and run through the calculations in real-time (not after hours). During the test, Diamond Hill compared 30 NAVs, and measured the difference between FundGuard and their actual NAVs.
According to Gary Young, Diamond Hill Capital Management’s chief compliance and risk officer, the results showed that 28 of 30 NAVs were exactly the same, and the other two were only off by one penny per share due to rounding — a result of minor data differences. “This was extremely good and accurate in my opinion,” he notes.
Remarking on the reliability and efficiency of the solution, Brian Lutes, senior vice president of fund accounting at Ultimus Fund Solutions, comments: “We’re extremely happy with the accuracy of FundGuard’s NAV calculations and the limited daily interaction from our fund accounting teams.”
Sustainable and future-ready wealth
The investment industry is at a critical crossroads. From climate change and ESG considerations to geopolitical events and cybersecurity, FundGuard believes that unless operational risk is viewed from a systemic and preventative point of view, investor protection will provide little more than a band-aid.
The industry has a responsibility to ensure that wealth is both sustainable and future-ready by addressing foundational risks. Ultimus has long understood this mission and continues to offer innovative technology solutions in service options to its asset managers — particularly those who want to build resilience into their operating models. Ultimus’ selection of FundGuard is indicative of this innovation.
As both FundGuard and Ultimus are proving, asset managers, or their fund administrators, have an option when it comes to NAV contingency solutions — one that takes into consideration accuracy, outage duration and affordability.
FundGuard’s investment accounting platform is a true cloud-native, reliable AI-powered operating system.
FundGuard offers one application with a code line and data model combined.
It includes three out-of-the-box configurations to address three primary use cases: contingency NAV (C-NAV), ABOR and investment books (IBOR).
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