The reporting of anything can, of course, mean rather different things to different people.

According to Oxford Dictionaries (online version, naturally) the word ‘reporting', in its guise as a noun, translates as ‘an account given of a particular matter, especially in the form of an official document, after thorough investigation or consideration by an appointed person or body.'

Bringing this to bear in the financial world, the most important word in this description is ‘thorough'. Of course, this can be entirely subjective, but it would be valuable if, at some point, there was a more uniform, regular and comprehensive level of disclosure required from fund houses.

Whilst this piece may seem more applicable to investors who do not get the opportunity to regularly engage with fund managers, greater transparency should ultimately aid all parties.  


Firstly, we must define exactly what we would like to be reported, and there are no real surprises here.

Ideally it would be incredibly useful, not least transparent, to see a routine snapshot of all underlying holdings (leaning towards the equity world here).

Admittedly, this is perhaps a little controversial and will never suit everyone, but surely the fear of investors directly replicating an out-of-date portfolio should be offset by the irreproducible ongoing abilities of the fund manager?

Given the changing regulatory landscape and high costs involved, there are also fewer professional investors than ever building their own direct equity portfolios, choosing instead to use collective vehicles (of course I am going to be biased here).

The move from some firms to do just this, such as Woodford Investment Management, has unsurprisingly gone down well. Of course, the portfolio includes a number of unquoted and early-stage companies that may not be accessible to the average investor, but the bulk remains in some fairly well-known names.

It would be refreshing if portfolio disclosure was no longer the domain of professional fund research teams and/or those with NDA agreements; at the very least it would drive a more interesting and higher level of debate across all industry participants.

I would also go so far as to surmise that those offering greater and regular transparency would not only help build investor confidence but perhaps ultimately even their own AUM.  

Leaving portfolio disclosure aside it may be useful to consider what other analysis an investor could hopefully anticipate from an investment firm. I won't trawl through what is expected on a fund house factsheet, for it may be more practical to discuss what clients should receive regarding a specific performance period.

Whilst trying not to focus on any particular firm there are some who do this rather well. Two companies that spring to mind are River & Mercantile Asset Management and Prusik Investment Management, both of which provide quarterly reviews that are comprehensive and well written. Ultimately they are seeking to answer, or preempt, those questions an investor would be likely to pose.

Therefore, amongst many things, it is always useful to see a discussion of what went on in the market, what has helped the portfolio and what has hindered it, what changes were made, if any, and how the fund manager views the strategy against the current economic backdrop.

This is also a great platform from which to expound the virtues, or defend the relevancy, of the investment philosophy and strategy, without laying it on too thick. Regarding the more quantifiable aspects of reporting, yes performance is obvious. However, we speak to many managers who consider their performance objectives not over discrete or arbitrary cumulative periods, but on a rolling (usually three to five years) annualised basis. Therefore, perhaps performance should be displayed as such, or in a manner that is consistent with how the manager views it.  

How did it do?
Attribution analysis, even if it is fairly fundamental, could also be shown; which specific stock, sector, geographical or market cap positioning has or has not worked. Statistics such as the recently-discussed active share are also always useful.

Though we would definitely argue that this is just one measurement among many, it does not automatically result in outperformance and should never be used in isolation. Risk-adjusted performance metrics on a rolling basis, such as the Information, Sharpe and Sortino ratios, are also very helpful in building an overall picture.

This is a very big topic and I have excluded a lot of relevant areas. However, in essence, those fund houses providing transparent, (quite) detailed and regular reporting could ultimately help forestall information requests and free up time elsewhere.

By Andrew Johnston, Investment Research Analyst