INVESTMENT COMMENTARIES CONTINUE TO BUILD TRUST AS REGULATORY DOCUMENTS CHANGE

The Canadian Securities Administrators’ (CSA) proposed changes to Management Reports of Fund Performance (MRFPs) are set to bring about significant shifts in how fund companies report to investors. While these changes may streamline reporting, they shouldn’t come at the cost of transparency and investor education.

What purpose are MRFPs supposed to serve?

MRFPs were originally launched because, prior to their introduction, investors often did not have ready access to timely information about their funds, including the decisions portfolio managers made within a fund or how macroeconomic conditions influenced their holdings.

MRFPs are, at their most basic, a regulatory document. They are also a vital conduit for fund companies to communicate with retail investors and their advisors. MRFPs are a tool to illustrate the value of investing in relation to the fees investors pay.

While we don’t dispute the CSA’s concern about investors’ need for more intuitive, engaging and consumable reporting, we believe the recent recommendation to reduce the fund manager commentary that makes up the Results of Operations section of MRFPs is a step back from the greater transparency investors want and need.

Investors need the “why.”

Commentaries that tell stories showcasing the “whys” of a portfolio manager’s investment decisions are fundamental to investors making their own good decisions. We know that investor literacy continues to be an obstacle across many communities and demographics. MRFPs help bolster investor literacy and are a consistent source of important information that many investors rely on. Now is not the time for fund companies to communicate with their clients less frequently and with less information.

What’s next?

The Ext. Marketing team has already been involved in several conversations with regulators and our clients about the CSA’s proposed changes. And while these changes might be imminent, regulators have said they still want fund companies to provide investors with timely communications. As a result, more frequent, high-quality touchpoints from investment firms need to become the norm to deliver on regulators’ overall recommendations.

The right touchpoints can help fund companies differentiate themselves and define the value they bring to investors in an age where investors are also savvier consumers of information and more accustomed to navigating an omnichannel environment.

This, however, is easier said than done. Re-engineering processes and crafting the right communication touchpoints take time, experience and resources. That’s where Ext. Marketing comes in.

Be transparent. Build trust.

Investment firms and advisors use commentaries as educational tools to keep their clients informed, provide insight into how they make decisions and capture their clients’ attention (and keep it). While regulatory documents might be changing, trust is still built through transparency.

To make that happen, you need an efficient process. When it comes to writing investment commentaries and thought leadership, Ext. Marketing is the industry leader. We have two Bloomberg terminals, analysts, as well as many of the best writers and editors in the financial services industry, on our team. After two decades of working on portfolio manager commentaries for many of Canada’s, and the world’s, largest asset managers, our best practices are the industry’s best practices.

In light of the CSA’s proposed regulatory amendments, we can help you have an active dialogue with your investors, clients and constituents, without crushing your internal team with more work. And we can help you maintain long-term investor relationships via a sustainable workflow and output.

We want to partner with you through this change.

Ext. Marketing is widely known as a partner that helps investment firms stay ahead of the curve. For decades, we’ve done this by creating high-quality, compliant and insightful commentaries that give our clients a competitive edge. We don’t expect that to ever change, and we will be happy to help you navigate these regulatory changes smoothly.

Contact us at info@ext-marketing.com to discuss the future of your commentaries.