Perspective - Summer 2009

Fund Dashboards

Helping fiduciaries to control their investment process

WITH EVER MORE demands on fiduciaries' time, and ever more material for them to take in, there is a real risk of fiduciaries becoming overwhelmed by disorganized data. The fund dashboard is a tool that fiduciaries can use to manage this data overload.

The whole fund view of a fund dashboard is divided into a number of areas, which we call �reporting focuses'. The number will depend on the type of fund and the governance structure but somewhere between 10 and 20 is probably a good guide for most funds. Each focus monitors one important aspect of fund processes, for example: funding status, manager monitoring, or risk budget. Collectively these provide comprehensive fund oversight.

The exact structure and content of the reporting focuses can be customized to the situation of the individual fund. Each of the reporting focuses receives a priority grading:

Red: for resolution; a decision is required immediately

Yellow: for attention; consideration is required in advance of a possible future decision

Green: for information; no decision is required.

A key part of the dashboard is a dashboard overview, summarizing information from each reporting focus (see diagram on the right). This provides a comprehensive snapshot of the fund and identifies areas requiring attention. Trustees can therefore see at a glance all the issues within their retirement funds, and are put firmly in control of the investment process.

By highlighting issues that require consideration by the fiduciaries, the dashboard automatically generates a list of high priority actions to focus on. This can then be used to provide better structured meetings and meeting agendas. Fiduciaries are therefore presented with an agenda that focuses time on those topics of the highest importance, and are also presented with a whole fund view which allows them to drill down within any reporting focus to which they want to pay more attention.

The dashboard can be delivered in hard copy, using tabs and page references to allow users to navigate between topics. However, navigating around the document can be cumbersome. Therefore fiduciaries might consider using an interactive electronic document which allows the use of links to jump to specific pages, and also to external documents where appropriate. This facilitates navigation and allows quicker retrieval of information.

In order to be in control of the decision-making process, we believe that fiduciaries need to be able to filter and prioritise the mass of data they receive. The dashboard provides a clear holistic fund overview and prioritizes decision requirements so that resources and fiduciary time are spent efficiently; improving fund governance and ensuring the fiduciaries are always in control.

The dashboard in action - Examples

Example 1: One of the reporting focuses is Funding. In this case, the grading is yellow to warn that the funding level is drifting away from its target. Although no decision is required immediately, the issue should be considered at the next meeting.

Example 2: The dashboard also contains tactical monitoring of, for instance, asset structure. This receives a red grading due to the suggested suspension of rebalancing. Time should therefore be allocated on the agenda for the next meeting to make a decision on whether to rebalance.

Example 3: Unlike the two previous examples, many reporting focuses will receive a green grading. In the example, Principles are up to date and therefore no action is currently required. Fiduciaries can, therefore, be assured that all areas are being monitored, but they do not need to spend unnecessary time on the monitoring process.