Shadow Fund Accounting: Time to up your game?

Shadow Fund Accounting is in the spotlight. Regulators and investors demand more transparency. Asset classes are increasingly complex and exotic. Add market turbulence, and it’s critical to know what your portfolio is worth, independent of your administrator’s end-of-day or end-of-month reporting.

Depending on your organization’s size, operational resources, and portfolio, consider your options:

• Shadow Fund Accounting: Strike a shadow NAV with our Portfolio Accounting Software for traditional and alternative funds
• NAV and Fund Oversight: Replace spreadsheets and automate processes with our NAV Oversight platform
• Outsourced Shadow Accounting: Shadow NAV-as-a-Service from our Middle & Back Office experts
• Co-Sourcing: A hybrid approach where we free up your internal resources by performing day-to-day operations on your accounting platform as an extension of your team.

9 common questions about Shadow Fund Accounting and NAV Oversight

What is Shadow Fund Accounting?

Investment funds use Shadow Fund Accounting to independently verify the results provided by their fund administrator. Firms use a parallel accounting system to check a range of financial records, including Net Asset Value (NAV), fees, profit and loss (P&L), and other financial calculations.

How do I know if I need Shadow Fund Accounting?

Shadow Fund Accounting adds an important layer of oversight, transparency, and risk reduction to fund management. When outsourcing fund administration activities, consider using Shadow Accounting to catch potential errors early and mitigate against operational, financial, and reputational risk.

What are the differences between Shadow Fund Accounting and traditional Fund Accounting?

Traditional Fund Accounting relies on the fund’s entire set of records, while Shadow Fund Accounting uses the fund’s NAV and related calculations as a basis for verification and oversight. Shadow Accounting is ‘lighter’ in terms of technology and operations than a full-fledged Fund Accounting program.

What are some key benefits of Shadow Fund Accounting?

Shadow Fund Accounting helps fund managers increase transparency, reduce risk, and independently monitor fund-related processes and data. As part of a robust oversight process, it provides assurance to investors and other stakeholders that the fund is valued accurately.

How can I implement Shadow Fund Accounting in my company?

Shadow Fund Accounting involves establishing a parallel system to independently verify fund-related data. As experienced providers of Fund Accounting, NAV Oversight, and middle and back-office solutions, we offer a range of options to help you address your Shadow Accounting and NAV Oversight needs.

Should we outsource our firm’s Shadow Fund Accounting?

Firms often outsource Shadow Fund Accounting to free up internal resources for core activities and leverage specialist expertise and economies of scale from service providers. If you don’t want to fully outsource your Shadow Accounting, we provide Middle and Back Office co-sourcing solutions where our experts perform activities and tasks on your platform in your environment as an extension of your team.

What is NAV Oversight, and how does it differ from Shadow Fund Accounting?

Shadow Fund Accounting verifies an array of results provided by outsourced administrators, while NAV Oversight specifically focuses on monitoring and ensuring the accuracy of Net Asset Value calculations. It uses oversight tools, such as Linedata Navquest, to reduce NAV-related risks.

What is Fund Oversight?

Fund Oversight is broader than NAV Oversight. It refers to the supervision and management of a range of fund-related processes, including accounting, administration, and compliance. Fund Oversight helps ensure smooth and accurate fund operations, including financial records, performance, and compliance with internal policies and regulations.

What is Portfolio Accounting? How does it differ from Fund Accounting?

Portfolio accounting tracks the performance and composition of a fund’s investment portfolio based on its financial transactions, including buys, sells, dividends, and interest. Fund Accounting is crucial for accurate financial management and compliance. It involves the detailed tracking, recording, and reporting of a fund’s financial activities, including income, expenses, and capital gains.