It may sound like an arcane subject but getting quick and accurate information on a fund's net asset value is crucial for a happy investment journey. Interruptions to data can hurt a firm's reputation. A study explores how industry practitioners are raising their game in overseeing the data provided to them.

A report by fintech firm Milestone Group says that investment firms are getting tougher about how they keep abreast of the net asset values that they broadcast, at a time when regulators are frowning on slipshod and out-of-date reporting.

The report found that 65 per cent more asset managers in North America and Europe monitor fund NAVs than was the case in 2014 when Milestone previously examined the matter. Some 40 asset managers and asset allocators were surveyed, including major names in the sector. Firms surveyed ranged in size from $3 billion in assets under management to $5 trillion AuM, spread across small, medium and large firms. The majority of respondents (73 per cent) are responsible for overseeing more than 150 net asset values.

Much of the modern fund management industry uses net asset value as a measure. The NAV represents the net value of an entity and is calculated as the total value of its assets minus all its liabilities.

Calculations can be complex when a fund, such as a private equity fund, holds illiquid investments over a long period of time, making it hard sometimes to get such figures quickly. Today, a number of firms offer services to provide data on NAVs for clients and wealth advisors.

Cases of breakdowns in data systems, causing delays in accessing accurate figures on the underlying value of assets, has led to the need for a closer oversight of NAVs. This has prompted industry figures to worry about how outages damage their reputation, and their ability to win and keep business. Some 87 per cent of respondents to the latest study said that avoiding reputational damage was a big reason for close oversight.

A greater number of respondents said that cybersecurity risks worried them more than in 2014. Some 30 per cent of respondents said it made them consider ways of measuring NAVs if things went wrong - this was not something they considered five years ago.

Some contradictions emerged from the research. Although respondents said that they realised automation is important for overseeing funds efficiently, many still use manual spreadsheets to enter data. Also, while nearly all respondents think that independence of the oversight function from their service provider infrastructure is important, service provider reports and portals - which do not generally qualify as independent - still play a significant role in current oversight practices for 73 per cent of respondents. 

Milestone operates a control platform to handle information about funds’ net asset values.