Financial advisors and dealers who want to offer alternative investments will soon have an option to streamline and scale the investment process.
Toronto-based Obsiido Capital Management Ltd. is launching software to digitize the paperwork and compliance workflows associated with alts and private investments.
Obsiido Pro will help advisors source, conduct due diligence, model and transact in alt funds through a unified cloud-based application, a release said on Wednesday.
Obsiido was co-founded by Nimar Bangash, formerly a product manager with AGF Investments and CIBC. Last year, Obsiido launched a platform for direct purchase of private market funds. Rather than acquire individual clients, that business aims to attract wealth firms that want to adopt the technology, Bangash said in an interview.
With Obsiido Pro, “our primary focus is partnering with wealth management firms, whether that is independent dealers or bank-owned dealers or [investment counsel portfolio managers],” said Bangash, who is CEO of the firm.
While the software will launch later this year, advisors can request a demo now.
With the demo, Bangash intends to “drive advisor interest into the hundreds and thousands,” he said, as Obsiido begins implementing customized versions of the software for advisors and firms.
Allocating to alts and private investments is a challenge for advisors as it requires data gathering and documentation — especially when allocating across managers and asset classes for a couple hundred clients.
“The database is going to be the key value prop for advisors, to start,” Bangash said.
Obsiido Pro has a database of alt strategies that can be filtered by asset class, manager, fees, fund structure, performance and so on — about 47 data points in total are collected from fund managers, Bangash said.
The database currently includes about 100 alt strategies. Bangash hopes it will grow to about 700 over the next few weeks, representing the universe of strategies available in the Canadian market.
The software also provides a digital process for facilitating subscription agreements, including obtaining client signatures. Each fund manager must opt in to digitize their subscription document, and “we’re already having those conversations,” Bangash said.
The software also includes the ability to build and maintain an approved product list (for head office) and to perform due diligence within a diligence hub.
Francis Sabourin, a portfolio manager with Richardson Wealth Ltd. in Montreal, said he’s been using alts for at least a decade. He previewed the software and is optimistic about what he described as a “new set of tools.”
“You’ll be able to do your own due diligence on all the funds [on the platform],” he said.
Sabourin wants to understand the software better, including any limitations, he said. Specifically, he’d like the software to let him perform simulations within his own models so he can provide clients with “a decent Sharpe ratio.”
Overall, “this software could help some firms to support their advisors or portfolio managers to manage properly their allocation to alts,” he said.
To understand how owning alts would have affected historical performance, the software will initially use index data to model and backtest portfolios containing public, private and hedge funds, Bangash said.
“In the future and based on the availability of performance data on individual alt funds in our database, we will expand the modelling tools to enable users to use actual funds instead of indexes,” he said.