Automated NAVs: Striking the balance through innovation

As innovation and automation propel the financial sector, staying competitive requires business leaders to reposition technology to meet clients’ evolving needs. Learn how cutting-edge NAV developments are making information timelier and more accessible to alternative investment managers.

Tags: Funds, Innovation, Technology, Alternative investments
Published: December 02, 2019

Today’s investment services industry is taking large strides toward hands-free and fully automated NAV calculation. Companies must leverage existing and future technology, data and innovation to adapt to these and other driving trends – all while maintaining a unified customer experience.

We discussed innovation and new advancements in NAV automation with Christine Waldron, global chief strategy officer of U.S. Bank Global Fund Services. Here’s what she had to say.


How does innovation impact NAV automation in alternative investments?

Hands-free NAV calculation and fully automated NAV calculation are big trends within the industry. For us, we’re now able to strike a fully automated NAV without any human intervention, and we’re able to deliver this NAV five days before we historically could. We achieved this by running a project that looked at our people, processes and technology, and making necessary adjustments to get us to where we could strike that NAV sooner, better and more accurately. That’s innovation.

Some of the biggest advantages of this achievement include: the ability to minimize errors without humans touching the data, the ability to have machines perform tasks on a 24/7 basis and the ability to free up human resources to focus on more thought-provoking tasks.


Can you expand on the distinction between innovation and automation?

Automation is a part of innovation but they are not one and the same.

Automation is where you look at tasks currently being performed and seek to improve them through automated processes. Innovation is more a case of looking at an end-product and seeing if there’s a better way to do it entirely. This may include how your people do things or how your systems do things – it can take a lot of different forms.


How long did it take to reach the point of fully automated NAV calculation?

This was a gradual progression that started for us around five years ago and focused specifically on the alternative investments sector. We looked at all the inputs into the NAV calculation and identified ways to streamline the transfer of that data into the engines accomplishing the accounting component. We wanted to ensure this aspect was a seamless data integration.

Next, we looked at pricing and expenses – and these are the main components of your NAV. We spent almost two years automating inputs into the NAV calculation. From here, we put a robust data layer around the NAV process. This helped us facilitate the required reporting.

The way you look at data is different when striking an automated NAV; it focuses more around capturing events that occur, such as trade files or a corporate action. Data is then gleaned from events such as these. Once you have events being captured in that data layer, you can use tools to automate that NAV calculation and trigger additional automation components – and that gets you to your fully automated NAV.


Is this system now relatively future-proof?

Absolutely. It’s now very easy for us to automate other stats, processes and unique nuances, and keep going on our automation journey.


Is there anything difficult to implement into the NAV calculation system?

While not necessarily difficult to add, it’s more a case of being proactive in positioning yourself to identify future needs that will require automation. New security types, as they’re developed, are a good example. The modelling, which goes into the likes of complex derivatives, requires a degree of thought and insight that machines simply are not yet capable of doing.

For the time being, a machine is still going to have a difficult time, for example, reading a 100-page credit agreement and determining whether it’s correctly modelled in the accounting system. The beautiful thing, however, is that automation has freed up our resources to read through various agreements and ensure they’re being done properly.

In some cases, an automated NAV serves to guide our staff to where their efforts should be focused, which is significant, based on pre-written criteria written into the NAV’s algorithm. The NAV can also trigger alerts to indicate abnormalities (e.g., if a trade file that normally contains 200 equity trades now contains one bank-loan trade).


What further advancements can we expect in this area in the future?

I believe we will continue to see the push towards more automated NAVs. This is going to allow for improved, enhanced quality. It will also quicken time to market on the NAV, making that information timelier and more readily accessible to the investor community.


Learn more about how we pair innovative technology with dedicated professionals to provide our clients with comprehensive fund service solutions.



U.S. Bank does not guarantee the products, services, or performance of its affiliates and third-party providers.

U.S. Bank Global Fund Services is a wholly owned subsidiary of U.S. Bank N. A. Custody and lending services are offered by U.S. Bank N.A. U.S. Bank Global Fund Services (Ireland) Limited is registered in Ireland with the Companies Registration Office Reg. No. 413707 and Registered Office: 24-26 City Quay, Dublin 2, Ireland. U.S. Bank Global Fund Services (Ireland) Limited is authorised and regulated by the Central Bank of Ireland under the Investment Intermediaries Act, 1995 U.S. Bank Global Fund Services (Guernsey) Limited is licensed under the Protection of Investors Law (Bailiwick of Guernsey), 1987, as amended by the Guernsey Financial Services Commission to conduct controlled investment business in the Bailiwick of Guernsey.