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Survey highlights opportunity to improve portfolio monitoring through data integration


Uptake of data integration tools to enhance portfolio monitoring in the private equity market is a growing trend although still remains limited to one third of the market. This creates a potential competitive advantage for those firms that have already moved beyond reliance on Excel spreadsheets alone. The prospect for general partners and limited partners to achieve more granularity and consistency as they monitor and analyse their portfolio companies is raised by the findings of a software survey of private equity firms by Preqin, a Baxon partner.

Survey highlights key benefits of portfolio monitoring software

Of respondents surveyed, the key benefits of portfolio monitoring software were seen as: –

  • Standardising and streamlining data collection, analysis and reporting
  • Automating generation and distribution of reports
  • Improving data accuracy/preventing human error

One of the key findings of the survey was just how few PE fund managers have moved beyond the functionality of their standard accounting systems or Excel spreadsheets. Fewer than 6% of firms were fully data-integrated, meaning data from core processing systems is standardized and integrated into a common information repository allowing the efficient and accurate reporting of accounting, performance and key portfolio metrics to management and investors.

Low take-up of PM software starting to change

It isn’t surprising then that nearly 65% of firms are not using any software packages for portfolio monitoring. The signs are, however, that this is starting to change with as many as a third of these firms in the process of considering such software, anxious perhaps to catch up with one third of funds who are already actively using third party monitoring software.

Users find portfolio monitoring software essential

For those using portfolio monitoring software, there was a clear bias toward the essential nature of these tools. On average, respondents rated the standardisation and streamlining of data collection, analysis and reporting as the most important feature for portfolio monitoring software. Improving data accuracy and reducing the scope for human error was, on average, the second most important factor. Automating the generation and distribution of reports was the third.

Features of Software Rated on Importance

Increasing reliance on enhanced tools

Regulatory compliance was, on average, the least required feature of portfolio monitoring software. However, in each category there was a consistent degree of unanimity about the essential nature of some of these features to the job of investment monitoring, demonstrating the degree to which users have come to rely on these enhanced tools.

This finding was further reinforced, with over 80% of respondents reporting that their portfolio monitoring software met or exceeded their expectations. Despite this high degree of satisfaction with portfolio software among existing users, cost was seen as the major prohibitive factor by over 30% of survey respondents who do not currently use tailored software. Almost 20% of respondents were either unaware of the software or its benefits, or had never considered its use, and nearly half of non-users could not name a supplier of portfolio monitoring software.

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