We approached Addepar with the desire to see if they could implement views that would project into the future rather than just the present. While Addepar is a powerful tool, it lacks the ability to manage future cash flows as well as provide information about Capital Call schedules that is necessary to make investment decisions. They then directed us to RCI as a way to find a solution for what we were looking for.
Prior to using RCI we had a decent grasp on what our unfunded private investments were, what our liquidity was, and what the potential for deploying cash for investments was. But, we found that often our cash balances remained high and constantly were trying to figure out what the optimal balance of unfunded to liquidity was to maintain an invested portfolio.
Now, using RCI, we are able to utilize all of the aforementioned information that Addepar provides and forecast it into future periods, allowing us to see how and when capital is called, what our lows looked like in Cash, and obtain a more accurate picture of our investment capability.
The nature of investing has always been tricky since no one has a crystal ball to tell you what is and isn’t going to happen. Using RCI, we can use data-backed logic and reasonable assumptions to more accurately predict what the future will look like for our clients. These benefits are understanding what my asset class percentage allocations are and what they will look like, understanding future cash flows, understanding a client’s capacity to investment, and many more.
Their responsiveness to user requests is very fast and it is very easy to work with them on desired product features. I figured that I wouldn’t have much in the way of input as to how the product functioned but after having worked with RCI for 7 months now I’m very happy with their ability to listen, learn my concerns, and work to build the best product they can.
You get out what you put into it. Some of the effort of setting up your clients' portfolios and designing how they function can be time consuming, but the more accurate and detailed you are the more accurate your outputs will be.
In my opinion, it’s the best way of attempting to predict the future of your client’s portfolio. It’s not an easy task by any means but the RCI team has thoughtfully created a product that lets their users predict how things will unfold as best as possible.
An example would be that during the beginning of the market dislocation as a result of the Coronavirus pandemic, we were carefully watching the credit markets and wanted to make some investments into that space as a result of everything that was happening. For several clients, we utilized RCI to understand where cash and liquidity balances were, what low return expectations might yield, and understand what our capital call liabilities were in the short term. Using RCI, we were able to commit several clients to investments in the credit markets on a quicker turn around than usual.
As RCI is future-focused, in our quarterly reports from Addepar we examine investments that utilized data from RCI as part of the decision criteria. Based upon the results of these investments, we adjust as necessary to continuously improve our processes.
This past quarter, we were trying to see what capacity one of our clients had to invest in two opportunities. After manually updating return assumptions and capital call schedules for existing investments, we were able to obtain a more accurate picture of what liquidity they had in the next three years. Using this information, we were able to provide our clients with an accurate number for dry powder and they then were able to commit to the two opportunities we identified for them.