HiddenLevers, a risk tech provider serving sophisticated RIAs, wants to see more detailed data from asset managers dealing in separately managed accounts.
“Almost a decade in business, and we’re still having major trouble finding daily and weekly returns data for most SMAs. The lack of transparency makes it so easy to be a bad actor,” says Raj Udeshi, HiddenLevers Founder. “We implore asset managers to level up and provide more granular SMA data, so HiddenLevers can do proper correlation analysis on your clandestine products.”
HiddenLeavers says that as the usage of separate accounts has grown amongst investment advisors, there is still no real gate keeper to ensure integrity of the data, and confirm that it’s up-to-date. That, the company says, could enable pernicious asset managers to make their offerings seem artificially better, including masking true volatility. HiddlenLeavers believes that as volatility returned in late 2018, the duty of large SMA platforms and data providers must outweigh their profit interest.
HiddenLevers began supporting SMA and annuity data feeds in summer 2018 with the ultimate aim of creating cultural change at leading asset managers to improve their transparency.
“It was inevitable that HiddenLevers was going to need sophisticated data feeds to do any portfolio stress testing on SMAs and annuities at scale,” says Joonas Niiholm, Enterprise Specialist at HiddenLevers. “We had a custom asset builder all these years for people needing to stress test structured products and other non-traded securities, but getting real SMA data feeds, no matter how janky, gives us a chance to demand better. That could lift the whole industry.”
HiddenLevers now offers a bundled data feed, which includes bonds, managed products and annuities. Users can get risk profiles for any separately managed account or annuity and see if active management has really helped lower risk exposure, or captured the stated upside opportunities.
“The real benefit of HiddenLevers regression engine comes when correlations can be done frequently, to get the real betas to the economic indicators,” says Praveen Ghanta (pictured), HiddenLevers Founder and architect of the company’s risk model. “In the hedge fund universe, prime brokers demand daily mark-to-market value and pricing, akin to Net Asset Value. Asset Managers providing managed strategies need to step up – it’s going to benefit them in the long run, separating the saints from the crooks.”