The Importance of Process – An LP’s Guide to Getting More Value from Their Portfolios

By: Paymun Saket

Managing Director - LP Products
March 25, 2021

LPs have long recognized the need for technology options that help them automate processes and aggregate data. This need for replicable, automated processes and systems has always been critical to LPs, but now has been pushed to the forefront due to pandemic-induced circumstances. Despite this, many LPs still rely on manual or one-off processes which must be duplicated, and — each time reporting requirements are updated — adjusted again and again to fit the output needed. What’s more, information derived via manual tasks often lacks uniform standards, which ultimately makes it difficult for LPs to effectively track the risk and exposure in their portfolios.

For the small number of LPs that have a handful of homogeneous funds, a manual approach may be workable at present. Still, manual data input and reconciliation processes take large amounts of time, constrain resources, and can open LPs up to costly error. And now that many LPs are turning to more diversified investments — private debt, private equity, real estate, and infrastructure — in an effort to increase portfolio returns and mitigate risk, the automation of processes and systems has taken on greater importance.

Having robust workflow processes around transactions, portfolio valuation, pipeline management, and other tasks will allow LPs to maintain an edge amongst their competitors. For example, utilizing automated processes for pipeline management lets LPs more fully analyze deals, complete due diligence, and make quick investment decisions. With regards to transactions, automated processes provide insight into investments from deal stage to maturity.

And when it comes to valuation, automated processes let LPs more quickly evaluate their portfolio, especially in an environment where market shifts can affect investments on a daily basis. In short, streamlined, automated workflows help LPs track their investments from start to finish across the investment lifecycle, ensuring consistency, reputability, and the regular and timely completion of tasks.

Automated processes become even more crucial when LPs are confronted by unprecedented events such as the Covid pandemic. With the necessity of a remote workforce, which has resulted in a situation where communication between teams is even more complicated, the assurance of reliable, replicable processes can help LPs respond quickly to even the most anomalous situations.

Automation lets LPs optimize their processes, from deal flow and contact management to workflow management and deal tracking, and ultimately leads to standardization across all functions. What’s more, as allocations to alternatives grow to include multiple asset classes and multiple currencies, so will the number of activities performed to reconcile investments, increasing the risk of errors.

How to Begin: Getting Internal Teams on the Same Page

With team members no longer gathered in one place due to the Covid-19 pandemic, keeping them on the same page presents a formidable challenge with manual processes in place. Teams across the front- middle-, and back- office are responsible for making investments, analyzing portfolio risk and performance, and accessing and processing large numbers of documents and multiple data streams, so it’s critical that everyone has access to the most up-to-date information in real time.

Across LP functions such as CRM, deal tracking, portfolio management and analysis, reporting, and investment accounting, a break in the information chain in any one place will make it difficult for LPs to achieve optimal investment outcomes in their portfolios.

Moving it All to the Cloud – Securely Access Information from Anywhere

Once an LP has made the decision to implement automated processes across the board, they should consider a secure infrastructure that can be accessed remotely by all team members across geographies and time zones. A cloud-based system of automated processes ensures easy access for all teams across all functions. The advantages of housing automated processes and systems on a cloud-based platform are not insubstantial. Namely, cloud-based systems:

For LPs, the adoption of both automated processes and cloud technologies will be key moving forward. The move towards technology-based portfolio management will help to enhance LPs’ decision-making by weeding out inefficiencies and placing them on more solid footing in terms of revenue generation.

The Way to Growth – Scaling Up Quickly and Efficiently

With a handle on automated processes and cloud technology, LPs can begin to turn their attention towards higher-value tasks. Resources can be directed where they’re needed most, and not wasted on manual reconciliations or risk mitigation tactics. From front- to back-office, automated processes let each internal function within the LP stay connected via consistent workflows, dashboards, and custom-generated reports.

For example, automated processes provide front office teams with the ability to quickly understand and track overall investment exposure, even within multi-asset class and multi-currency portfolios, so they can make more-informed portfolio decisions faster. Automated processes let portfolio managers track and analyze new investment opportunities more swiftly, calculate total portfolio exposure more precisely, and evaluate the impact on their portfolio over a chosen time period with greater accuracy.

For middle office teams, it becomes vastly easier to synchronize data across risk and performance groups, permitting them to effortlessly gather data and analytics on the performance and risk of their portfolios and the overall organization. This approach is preferable to one that depends on manual processes, which can necessitate further reconciliation and manual work.

Finally, back-office teams can benefit from automated processes which can help them meet increased demand. When new investment types are added to a portfolio, distinct processes are required to collect information relevant to each investment type. Utilizing manual processes, the addition of new investment classes would require the back office to scale up staff and resources — not so with automated processes. Lastly, back-office teams depend on workflow management tools to ensure that documentation is properly reviewed and the information is validated. Again, processes that are integrated and automated can facilitate the swift completion of these tasks.


LPs that want to boost their response to fast-changing markets, require the accommodation of multiple asset classes and multiple currencies in their portfolios, or who wish to be able to focus on core competencies know that automated processes embedded in a front-to-back solution can help them best address these challenges by allowing them to shed manual processes, bring geographically diverse teams together via a single data instance, and scale their business successfully in the face of increased competition.

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