Pin-point data helps Trilogy Funds make sharp investment decisions.

In its Lending business, Trilogy Funds uses a series of models to forecast the cash flows associated with each loan.  Prior to Workday Adaptive Planning, Trilogy Funds used a complex Excel financial model to meet its forecasting requirements. The model was inflexible, prone to human error, and heavily dependent upon the subject matter expert to maintain. When its subject matter expert  left Trilogy Funds, Chief Operating Officer Justin Smart stepped in to take control of the forecast.  “Spreadsheet reporting is fine for smaller funds, but as we grew to include multiple schemes it became clear we had to rethink how we forecast our cash flows,” Smart explains. “Modern investment decisions are all about the data. We had to provide our executives and the Lending Committee with better information.”

Smart began looking for specialized software that could remove human error and streamline reporting. “We needed a solution that could scale and connect into our CRM, loans management, and investor registry systems. It had to be intuitive and easy to use because we were rolling this out to a suite of business users, with varying levels of IT literacy. Product aside, we wanted to work with a trusted, experienced, and understanding implementation partner.” 

In Workday’s Adaptive Planning, Trilogy Funds found a solution that ticked all its boxes – and could be tailored to manage the complex, bespoke forecasting, and reporting requirements of a pooled mortgage fund.

Dramatically more accurate bottom-up forecasts.

For its weekly lending reports on Fund inflows and outflows, Trilogy Funds previously used fixed ‘S curves’ to make broad assumptions about how each loan would draw down. “Every loan type has a unique draw-down curve. With spreadsheets, we couldn’t take those nuances  into account,” explains Smart. “We were using a standard yardstick for forecasting. That’s just not what happens in reality.”

Today, using Workday Adaptive Planning, Trilogy Funds portfolio managers key in bespoke characteristics, providing better and unique insights into their loan portfolios – in a fraction of the time.

The bottom-up approach has also enabled Trilogy Funds to understand which portfolio manager is making the most accurate forecasts. “At a glance, we can compare the quality of forecasting inputs by individual,” says Smart.

Better redemptions and repayments predictions.

Smart says Trilogy Funds has also seen a significant improvement in how the fund manager forecasts and allows for redemptions.

“The beauty with Workday Adaptive Planning is that it’s connected directly into the registry system that houses the records of investors’ unit issuances and redemption requests,” Smart says. “We have a direct view of when those redemptions are due to be paid, which is such an important element when we’re making fund decisions.”

He says that, with actual data now feeding into forecasts from multiple sources, Trilogy Funds can also track every single sale of security, forecast when they’ll be sold, and how much they’ll sell for in order to determine how much will go back into the fund.

Improved lending intelligence.

Before entering a new loan agreement, Trilogy’s Funds Lending team uses scenario analysis to see how changes in drivers like interest rates, term, or repayment dates would impact the borrower’s serviceability. 

“The funding table we used to put in front of the Lending Committee was basic,” explains Smart. “There was a lack of visibility over the likely return to the business over our pipeline of deals. Now with Workday Adaptive Planning we can flex and manipulate the funding tables on the fly to demonstrate the impact of different scenarios. The Committee can immediately see critical return metrics and risk metrics when assessing each loan.”

No-pain ECL reporting.

In 2018, the firm’s mortgage fund was required to comply with a new accounting standard AASB 9, which required the manager to develop an expected credit loss (ECL) model, which it must report on twice a year. A large and complex Excel model was developed that captured a series of qualitative inputs from portfolio managers, which was used in determining the ECL. “It used to take two people a month full time to build that model in Excel,” says Smart.

Each reporting period, Trilogy Funds had to rebuild the model again. Smart says the task was a large impost on the team and we needed to find a better way of calculating the ECL for the Fund.

“These days, our portfolio managers input their assessment via a dropdown menu in Workday Adaptive Planning and the model calculates the ECL for the portfolio. Now the consolidation is instant; we can spend our time tweaking the assumptions to improve the reliability of our ECL output.”

Smart also gets the system to build a dashboard for Trilogy Funds auditors, who can log in and run their own models. “It makes their job easier too,” Smart says.

Senior leaders no longer touch reporting.

Trilogy Funds uses OfficeConnect to generate Microsoft Office reports that give management an overview of its lending portfolio. “This used to take the Financial Controller an entire day,” says Smart.  “Now they simply just hit ‘refresh’.” His own role has also changed. “I’ve shifted out of the details and more into strategy. I used to be heavily involved in reporting. Now I’m no longer involved – other than reviewing the output.”