Sub-advised '40 Act funds create a structural data gap between the sponsor and the portfolio. Milemarker closes it — without replacing the sub-advisor.

A sub-advised '40 Act fund is a registered investment company whose investment adviser (the sponsor) engages one or more sub-advisers to handle portfolio management. The sponsor retains responsibility for distribution, the compliance program, board relationships, and service provider management; the sub-adviser holds the portfolio management contract and executes trades. Oversight of each sub-adviser is required under Rule 38a-1, which extends the fund's compliance program to every service provider that can affect compliance with the federal securities laws. That oversight depends on continuous data flow from the sub-adviser — holdings, trades, attribution, 17j-1 personal securities attestations, best execution evidence, and trade error reporting — that the sponsor must be able to review without running the trading desk.

The Sub-Advisor Data Problem

Sub-advisors send monthly position files. Quarterly attribution arrives as PDFs. Trade blotters come on request. Compliance letters show up ahead of each board meeting. The sponsor, which has the legal responsibility for the fund, ends up reviewing the sub-advisor's work through a window the sub-advisor chose. That works — barely — when the cadence matches the board calendar. It breaks down the minute an independent trustee asks a question between meetings.

Rule 38a-1 puts the sponsor's CCO on the hook for certifying the fund's compliance program, including the portion the sub-advisor owns. The CCO has to conclude that portfolio trading, personal securities, and best execution at the sub-advisor meet the fund's standards — without sitting at the sub-advisor's trading desk. The only way to stand behind that certification is to have evidence in hand that is current, queryable, and traceable.

Manager-of-managers complexes multiply the problem. A fund with three to ten or more sub-advisors across asset classes is running that many parallel data relationships. Each sub-advisor has its own systems, its own file formats, its own attribution methodology, and its own compliance reporting cadence. The sponsor's operations team spends the week before each board meeting translating between them, and the CIO team spends the weeks between meetings emailing for updates.

Board members have increasingly specific questions. Which sub-advisor had the largest number of trade errors over materiality last quarter. Which manager's attribution was driven by security selection rather than allocation. How did the growth sleeve's compliance exceptions compare to the value sleeve's. Those questions presume that sub-advisor data is normalized, comparable, and continuous. In most sponsors, it isn't.

What Sub-Advisor Data Aggregation Requires

01

Daily Holdings & Trade Files

End-of-day positions and blotter data from every sub-advisor, ingested automatically and reconciled against the fund administrator's books so the sponsor sees the portfolio in near real time.

02

Normalized Attribution

Attribution from each sub-advisor's system (FactSet, Bloomberg PORT, Axioma, Barra, or in-house) standardized to a consistent schema so sleeves and managers can be compared on the same basis.

03

Trade Error Log

A consolidated log of trade errors across all sub-advisors — with severity, client impact, correction, and materiality — so the CCO and board can see the full error surface in one view.

04

Best Execution Evidence

Trade-level execution quality data from each sub-advisor consolidated against consistent benchmarks so the best ex committee can evaluate managers comparably, not one spreadsheet at a time.

05

17j-1 Personal Securities Feed

Sub-advisor personal trading attestations and broker feeds tied into the sponsor's code of ethics program so 17j-1 oversight reaches all access persons, including those at each sub-advisor.

06

Sub-Advisor Compliance Dashboard

One view per sub-advisor — exceptions, attestations, trade errors, attribution, best ex — that powers quarterly sub-advisor reviews and the 15(c) renewal cycle from the same data.

How Milemarker Does It

Milemarker ingests from each sub-advisor through its preferred channel — SFTP file drops, institutional API, or pass-through from the fund administrator. Daily holdings, trade blotters, monthly attribution, 17j-1 attestations, trade error reports, and quarterly compliance letters are mapped once per sub-advisor and normalized on ingestion into the firm-owned Snowflake warehouse.

Every security maps to a unified security master so positions from different sub-advisors using different identifier conventions (CUSIP, SEDOL, ISIN, vendor IDs) line up on the same instrument. Every portfolio maps to a unified portfolio model so the fund view and the sub-advisor view share a common frame. Attribution is standardized to a consistent methodology so a growth sleeve managed by one sub-advisor and a value sleeve managed by another can be compared on the same basis.

Navigator AI lets the CIO, CCO, and operations team ask questions in plain English across the sub-advisor book: "how is our emerging markets sleeve performing net of our growth manager's," "which sub-advisor had the most trade errors over materiality this quarter," "show me best execution shortfall by sub-advisor against the VWAP benchmark for the last year." Answers come from the firm's own Snowflake warehouse with source lineage back to each sub-advisor's file.

Milemarker Relay automates the routine cadence. Quarterly sub-advisor reviews assemble from the warehouse on a schedule — holdings reconciliation, exception summary, attribution package, compliance letter intake, trade error review — ready for the sponsor's team to sign off instead of assemble. Board books render from the same data, manager by manager. 15(c) renewal cycles — the annual contract renewal that sub-advised funds run with every sub-advisor — pull their evidence base from the warehouse rather than from a month of data requests.

The sub-advisor is not replaced. The sub-advisor continues to run the portfolio, execute trades, and hold the portfolio management relationship. What changes is that the sponsor owns a normalized, continuous record of the sub-advisor's output — enough to oversee with confidence, answer questions between meetings, and stand behind the 38a-1 certification.

Before Milemarker

Monthly position files reviewed by hand

Attribution formats differ across sub-advisors

Trade errors arrive in quarterly PDFs

15(c) renewal kicks off a month of data requests

Board questions between meetings take days

38a-1 oversight relies on sub-advisor letters

With Milemarker

Daily holdings ingested and reconciled

Attribution normalized across all sleeves

Trade error log continuous across all sub-advisors

15(c) packet assembled from the warehouse

Trustee questions answered in the same call

38a-1 oversight grounded in live evidence

Who This Is For

Fund Sponsors with Sub-Advised Funds

Sponsors that run even one sub-advised '40 Act fund already carry the structural data gap. A unified sub-advisor data layer turns the sponsor's oversight from periodic review into continuous presence — without changing the commercial relationship with the sub-advisor or the operating cadence the sub-advisor runs.

Multi-Manager Complexes

Fund families organized around a manager-of-managers model — whether target-date suites, multi-asset allocation funds, or multi-manager equity and fixed income complexes — benefit most from normalization. The cost of comparing managers on the same basis drops dramatically when attribution, compliance, and trade data all roll up from one warehouse. Firms like Flat Iron Wealth have used that normalization to make manager selection and retention a data exercise rather than a relationship exercise.

CIOs Overseeing Sub-Advisor Selection

The CIO and investment team responsible for hiring, monitoring, and replacing sub-advisors depend on comparable data. Navigator AI turns the standard CIO questions — which manager added alpha net of fees, which sleeve's dispersion spiked in the last correction, which sub-advisor's style drift merits a call — into queries against the warehouse rather than tickets into operations.

CCOs Responsible for 38a-1 Oversight

The fund CCO certifies annually that the compliance program works across every service provider — including each sub-advisor. Sub-advisor data aggregation is how the certification gets from a sub-advisor letter that says "yes" to an evidence base that shows the year's exceptions, trade errors, pre-clearance results, and best ex performance actually support the conclusion.

Frequently Asked Questions

Does Milemarker replace the sub-advisor?

No. The sub-advisor continues to run the portfolio, execute trades, and hold the portfolio management relationship. Milemarker is a data layer for the fund sponsor. It ingests and normalizes the data the sub-advisor already produces — holdings files, trade blotters, attribution, compliance attestations — so the sponsor can oversee, report, and answer board questions without standing up a portfolio management system of its own.

What sub-advisor data formats do you handle?

Milemarker ingests from SFTP file drops, SOC-2 sanctioned API connections, and direct fund administrator pass-through feeds. Common formats include daily positions files, end-of-day trade blotters, monthly attribution packages (typically PDF or Excel), 17j-1 personal securities attestations, trade error logs, and quarterly compliance letters. Each sub-advisor's format is mapped once to the unified model and normalized on ingestion.

How does attribution normalization work across sub-advisors?

Each sub-advisor reports attribution in its own system and its own format — FactSet, Bloomberg PORT, Axioma, Barra, or an in-house model. Milemarker normalizes to a consistent attribution schema (sector, country, style factor, security selection vs allocation) and a consistent benchmark methodology so sleeves can be compared on the same basis. Where a sub-advisor's methodology differs materially, the lineage is preserved so the sponsor can see the source assumption.

What about trade errors from sub-advisors?

Trade errors typically arrive in monthly or quarterly reports from each sub-advisor, in varying formats. Milemarker ingests them into a consolidated trade error log with standardized fields — error type, security, sub-advisor, detection date, client impact, corrective action, materiality — so the CCO can see all sub-advisor trade errors in one view rather than reading through a stack of sub-advisor letters each quarter.

Can sub-advisors see anything in the Milemarker environment?

The default is no — sub-advisors send data in but do not see out. The Snowflake warehouse belongs to the fund sponsor. Some sponsors choose to open a narrow view back to each sub-advisor (the fund-level holdings the sub-advisor already owns, plus consolidated service-level dashboards) using Snowflake's data sharing, but that is a configuration choice. Confidentiality across sub-advisors is preserved by default.

How does this help with board reporting for sub-advised funds?

Board books for sub-advised funds typically include manager-by-manager performance, attribution, compliance attestations, trade errors, best execution evidence, and 15(c) renewal materials. With sub-advisor data normalized in one warehouse, each of those sections can be rendered from the warehouse on schedule. When a trustee asks why a given sleeve underperformed or how a sub-advisor's trade errors compare year over year, the answer is a query rather than a week of emails.

What about GIPS composite reporting when sub-advisors are involved?

Many sponsors of sub-advised funds also maintain GIPS composites that include both SMA and fund versions of the sub-advised strategy. Milemarker's unified returns model lets the sponsor roll sub-advised fund returns into composites alongside SMA accounts on the same strategy, with consistent methodology. For sponsors maintaining firm-wide GIPS compliance across multiple sub-advisors, this is often the central value.

Related guides

Part of the Data Infrastructure series:

• Data Platform for '40 Act Fund Sponsors: Unifying Fund Admin, Transfer Agent, Sub-Advisor & Custodian Data

• NAV Reconciliation Automation for '40 Act Funds

• '40 Act Fund Compliance Data: Rule 38a-1, 17j-1, 22c-1 in One Data Platform

• GIPS Composite Reporting Data for Fund Sponsors and Asset Managers

• Data Platform for RIA Aggregators & Consolidators

• Custodian Data Aggregation: Unified Reporting Across Schwab, Fidelity & Pershing