Tech firm challenges fund firms on performance numbers

Technology provider Confluence Technologies Inc. is challenging fund companies on their performance data. Confluence is inviting mutual fund administrators to send in their performance reports for a free audit through Oct. 29. The company will run its performance calculations against the firms' historical numbers to see if there are any errors. “2010 is the year of transparency,” said Joan Tesla, vice president of marketing at Confluence. “That is why we thought now was a good time to do this.” Data integrity issues are a top concern for fund company executives, according to a recent Confluence survey of 130 U.S., Canadian and European fund executives. “I think advisers and portfolio managers care about this because this is about data integrity,” said Gregg Smith, service delivery manager. Advisers rely on the veracity of these data when dealing with clients, while portfolio managers use those data to know if they are making the right investment decisions, he said. Making sure that fund performance information is accurate can be more challenging for firms that conduct their fund reporting manually, Mr. Smith said. But there are also many factors, such as tax law, that can affect these numbers, he said. Eighty-six percent of executives recently surveyed by Confluence said that they are concerned about manual processes affecting their ability to control errors. “You can see incorrect tax rates' being used or maybe foreign credits weren't applied exactly the way the Securities and Exchange Commission has laid them out,” Mr. Smith said, speaking of some common errors that firms make in reporting performance. Confluence mailed the challenge to new mutual fund customers, which the firm estimates make up about 25%-40% of the mutual fund market.