One of the most important operational tasks hedge fund administrators perform is determining net asset value or the NAV. Calculating the NAV involves the fund’s accrued income and expenses as well as the current market value of its securities. The NAV is critical as it represents the price at which investors buy and sell fund shares.
Unfortunately, the vast majority of fund administrators still calculate the NAV manually, using spreadsheets to track asset prices, approvals, and to-do lists.
While funds can delegate responsibility for NAV calculation, they can’t delegate responsibility for its accuracy or continuity. Inadequate oversight and resiliency plans may expose funds to reputational risk, loss of competitiveness, and financial loss.
This is why NAV oversight is such an important process. Best practices for NAV oversight are still evolving, and the best approach for a given fund depends on a number of factors. These include the organization’s size, embedded systems, and practices as well as whether NAV is calculated in house or outsourced, and pressure (or lack thereof) from regulators, investors, and other stakeholders.
One important best practice, however, is avoiding spreadsheets for NAV oversight. Funds should ensure true segregation of duties between the teams and technologies used for NAV production and NAV oversight, regardless of where the NAV is struck.
The advantages of automating NAV oversight and validation
Automation offers a stronger, more reliable approach to NAV oversight. For example, the IVP NAV Solution helps funds manage NAV oversight and control while establishing the integrity of NAV measures. This solution effectively replaces inefficient and semi-automated NAV oversight processes with robust, independent, and intuitive systems that offer standardized controls and intelligent analytics. Its fully automated architecture integrates with internal and external systems, helping funds detect inaccuracies with standard and custom control checks. The solution also:
- Provides an automated, exception-based, end-to-end, process-driven fund oversight solution
- Improves efficiency, scalability, and reliability with standardized analysis frameworks and straight through processing
- Prepares NAV data for comparison, eliminating the need for manual data collection
- Eliminates error-prone spreadsheets, enabling funds to handle extremely high data volumes
- Standardizes data delivery in a format that is easily consumed in NAV review
- Includes pre-configured NAV and pricing templates with validation rule libraries
Bring the power of automation to daily and monthly NAV oversight with the IVP NAV Solution. Contact us at email@example.com to see how it can save time, effort, and cost while improving the accuracy and accessibility of critical NAV data.
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