Choosing the Right Investment Reporting Tool for Your Financial Needs

investment reporting

Choosing the Right Investment Reporting Tool for Your Financial Needs

Keeping a tab on your investments is crucial to making the most of it. Large-scale investors and asset managers are well aware of the benefits of constantly monitoring portfolios. They continuously monitor the performance of their investments to ensure everything is on track. Based on the portfolio performance, investors can prepare exit strategies. 

Imagine what would happen if investors could not gain access to reports and investment data. They might fail to apply portfolio management strategies effectively. Luckily, reporting tools are available to help them make informed decisions. Many vendors and research firms provide investors with new-age reporting tools. Read on to understand how to choose the right investment reporting tool for your financial needs.

Demystifying investment reporting

Before understanding how to choose a reporting tool, you must know about investment reporting. It is the process of generating detailed reports regarding an individual’s or organization’s investments. It includes summarizing holdings, monitoring portfolio performance, tracking key metrics, and other processes. These processes help generate investment data used to make informed decisions. 

Data related to different investments are integrated with reporting. Investment reporting can be performed for multiple reasons, including risk management and regulatory compliance. Without investment reporting, one would never know how assets are performing and what should be the next step. For portfolio management, diversification, balancing, and other tasks, you need investment reporting. In short, investment reporting generates insights that help investors make informed decisions regarding their assets/holdings.

Investment reporting generates several details, which are as follows:

    • Investment reporting generates a portfolio summary. A portfolio summary can help you understand your investment objectives, asset allocation strategies, and more.

    • Detailed information related to holdings is generated via investment reporting. For example, investors can know the market value of their holdings and the income generated by them to date.

    • Investment reporting helps investors know the key performance metrics. For example, metrics like return rate, liquidity, CAGR, and ROI can help investors form better exit strategies.

    • Investment reporting also helps in recording all financial transactions. For example, investors will know all the purchases and sales they made via their trading accounts.

    • Investment reporting generates insights that help with risk management. For example, it can determine the risk exposure of a portfolio, thus allowing the investor to apply rebalancing strategies.

    • Investment reporting can help you compare portfolio performance with popular market indexes. Since you have a detailed performance report, you can easily compare it with a benchmark index.

How to choose the right investment reporting tool in 2023?

Investors aren’t going to generate investment data manually. For individuals having few investments, reporting might be easy. However, the same is not the case with asset managers and organizations with a wide range of assets. In such a case, an investment reporting tool is required to reduce the manual burden. Since many vendors are in the market, choosing a reporting tool might be challenging. Here’s how to select an efficient reporting tool for your financial needs:

Analyze the reporting capabilities of the tool  

The first step is to consider the reporting capabilities before choosing a solution. Can your reporting tool generate eye-catching data visualizations? Does it allow you to customize report templates according to your financial needs? Can the reporting tool generate portfolio performance in real-time? All these questions must be answered before you start using an investment reporting tool.

Focus on data integration

An efficient reporting tool must collect data from different sources, including brokerage accounts and financial institutions. It cannot generate insights and metrics without aggregating investment data from different sources. Focusing on data integration becomes essential for organizations, as they might have multiple investment sources, trading accounts, and digital platforms.

Look for customizable metrics

You might not be comfortable with the pre-decided metrics within a reporting tool. Let us say the reporting tool generates ROI, CAGR, Sharpe ratio, standard deviation, Beta, and other metrics. However, you want to track the P/E ratio, annualized returns, dividend yield, and expense ratio. In such a case, the reporting tool must allow you to choose the metrics that suit your financial needs.

Don’t compromise on security

Security is the most significant factor when choosing an investment reporting tool. Since a reporting tool will have access to your assets, portfolio, and investment strategies, you need to keep it safe. Before choosing a reporting tool, check for user access controls, two-factor authentication, encryption techniques, and other safety standards.

Look for support from the vendor

Organizations might not know how to use new-age reporting tools to their advantage. In such a case, the vendor must provide training videos or support. In addition, check for the availability of the vendor for common issues with the reporting tool.  

In a nutshell

Investors must keep an eye on their holdings, assets, portfolio, and investment strategies. An investment reporting tool can help investors do that with minimal manual interference. However, investors must choose a customizable reporting tool for better results. So choose your investment reporting tool wisely.