Company: ArrowMark Partners
Location: Denver, Colorado
Financial Services Sector: Public and Private Credit and Equities, Leveraged Loans, and Real Estate Finance
Background
A leading investment management firm with complex portfolio structures—including regulated capital commingled funds, funds of one, collateralized loan obligation (CLO) equity, and structured finance vehicles—sought a trusted external partner to streamline and standardize investor-level performance calculation processes. With limited support from fund administrators, the firm’s internal teams were conducting time-consuming calculations, straining resources and efficiency.
The Challenge
As the firm scaled its offerings, the demands around investor-level performance reporting increased in complexity and volume. Key challenges included:
- Resource Constraints: Internal teams lacked capacity to continue managing the highly nuanced and time-sensitive investor-level performance calculations.
- Calculation Complexity: Performance metrics required both gross and net of fees and needed to be segmented for all investors vs. fee-paying investors.
- Turnaround Time: Deliverables were expected within 30 calendar days after quarter-end, which proved challenging given the volume of vehicles and manual processes.
- Consistency Across Funds: Variability in calculation methods across series and separate account vehicles made it difficult to maintain consistency.
The Solution
To address these challenges, ACA’s Investment Performance team was tasked with a two-phased approach designed to assess the firm’s current state and deliver a scalable managed solution.
- Gap Assessment and Onboarding: ACA began with a comprehensive onboarding and diagnostic process. We assessed the existing performance methodologies and investor-level reporting policies against industry best practices, including Institutional Limited Partners Association (ILPA) and SEC Marketing Rule standards. We also evaluated investor materials for completeness, transparency, and regulatory alignment.
- Ongoing Managed Services: ACA delivered full-scale managed performance services, including:
- Quarterly Investor-Level Performance Calculations: ACA assumed responsibility for calculating Internal Rates of Returns (IRRs), Total Value to Paid-in-Capital (TVPI), Distributed to Paid-in-Capital (DPI), and Residual Value to Paid-in-Capital (RVPI) (gross/net; all/fee paying investors), across the various vehicles.
- System Integration: ACA leveraged both the client’s internal calculation systems and ACA’s proprietary tools to ensure accuracy, reconciliation, and timely delivery.
- Policy Maintenance and Consulting: ACA provides ongoing updates to performance reporting policies in response to regulatory changes and ILPA guidance. ACA also provides unlimited consulting and optional onsite support.
The Result
- Increased Bandwidth for Internal Teams: Marketing and client portfolio teams were able to reallocate resources to high-impact strategic initiatives.
- Improved Accuracy and Consistency: Investor-level calculations became more reliable with consistent methodologies applied across vehicles.
- On-Time Delivery: ACA consistently met the 30-day turnaround following quarter-end, delivering timely and actionable reports to stakeholders.
- Scalable Framework: A clear foundation was established to onboard new funds and reporting requirements with ease.
- Enhanced Reporting: Reports aligned with ILPA and SEC guidelines, ensuring compliance and reducing regulatory risk.
Conclusion
The partnership has laid the groundwork for a long-term collaboration, with ACA continuing to enhance reporting processes and support the firm’s expanding portfolio as the firm has more resources to focus on growth and company objectives.
How We Help
ACA is the only GRC firm that combines regulatory compliance expertise with deep investment performance knowledge, making us uniquely positioned to assist firms in navigating complex performance calculations—such as those outlined in this case study.
Whether you are looking to launch, grow, or protect your firm, ACA’s Managed Performance Services delivers scalable solutions and meaningful cost savings that adapt to your needs.
In addition, collaborating with us can enhance service offerings, strengthen risk mitigation, simplify the intricate investment process, and seize opportunities for growth and innovation. Our services include:
- Task-Based Solutions: We provide targeted support for performance calculations, composite management, custom track record creation and maintenance, generating performance data for marketing materials, fee calculations, risk metrics analysis, and staff augmentation.
- Private Fund Reporting Support: Our services extend to supporting private fund reporting and ILPA reporting, helping firms align performance metrics with investor expectations and industry best practices across private funds and liquid funds.
- Global Investment Performance Standards (GIPS®) Compliance and Verification Support: We can manage the entire GIPS compliance process, including composite management, account and composite level return calculations, outlier review, policy updates, GIPS report updates, and verification oversight, providing a complete solution for firms seeking full GIPS compliance management.
Leveraging our expertise allows firms to enhance accuracy, improve efficiency, and mitigate risk while streamlining the investment performance processes. Start a conversation with us today to learn more.