Platform · NexFundAI
Fund surveillance that never sleeps. Because fund managers know when reporting day is.
What NexFundAI Does
NexFundAI is a continuous AI and machine learning surveillance engine for Australian managed funds. It answers a single, fundamental question about every fund it monitors: given this fund's disclosed holdings and stated strategy, do its actual returns make sense?
When a fund claims to hold 60% Australian equities and 40% bonds, NexFundAI constructs a synthetic version of that portfolio using publicly available index data and compares its expected daily performance against the fund's actual reported NAV. Persistent, unexplained gaps between what the fund should return and what it actually returns are flagged, scored, and escalated. The output is a composite integrity score per fund — updated monthly — with a 10-dimension breakdown showing exactly where the concerns are and how serious they are.
This is not a performance rating. NexFundAI does not tell you whether a fund is a good investment. It tells you whether the fund is behaving consistently with what it says it is doing. Those are different questions, and the second one is the one that most due diligence processes fail to ask rigorously enough.
A critical distinction
Behavioural integrity score, not a performance rating
A performance rating measures outcomes. NexFundAI measures behaviour — the patterns in how a fund operates that indicate whether its manager is acting with integrity and consistency.
A fund can have excellent performance and a poor NexFundAI score. That is a warning sign: the returns may be real, but the way they are being generated does not match the disclosed strategy. Conversely, a fund can have modest returns and a high NexFundAI score — consistent behaviour, transparent operations, exactly what it says on the tin.
For dealer groups building an Approved Product List, and for wealth platforms selecting funds for their product menu, this distinction is critical. Performance ratings are backward-looking. NexFundAI is watching what is happening now.
10 Scoring Dimensions
NexFundAI scores each fund across 10 independent dimensions — five quantitative, derived from daily NAV and market data, and five narrative, derived from AI analysis of fund documents including PDSs, Investment Manager reports, and Target Market Determinations. Each dimension scores from 1 to 10, where 10 means behaviour is clean and consistent. A single dimension scoring 2 or below caps the composite score at 5 — a single serious red flag cannot be averaged away.
Window Dressing
Does the fund rotate into benchmark-friendly holdings just before reporting dates, then rotate back? This mid-month versus end-of-month variance ratio is one of the clearest signals of deliberate portfolio manipulation around reporting cycles.
Risk Shifting
Does the fund take on more undisclosed risk when it is underperforming — a tournament effect where a losing manager bets bigger to catch up? Detected via the correlation between cumulative underperformance and rolling tracking error.
Closet Indexing
For funds claiming an active growth or quality style, does the excess return load heavily on a yield or value factor? This detects closet yield indexing — funds charging active fees while delivering factor exposure that could be replicated cheaply.
Liquidity Mismatches
Does the fund run a different portfolio mid-period, then clean it up before month-end? Early-period versus late-period residual variance reveals whether the disclosed holdings represent the actual portfolio or just its reported face.
NAV Tracking
Do the fund's returns match what its disclosed holdings should produce? Persistent unexplained deviations suggest the fund is doing something different from what it claims.
Strategy Consistency
Has the fund's stated strategy changed materially between reporting periods without adequate disclosure? AI analysis of successive fund documents detects quiet strategy drift.
Investment Manager Alignment
Does the Investment Manager report commentary align with the fund's actual performance data? A fund that claims it performed well for reasons that do not match the numbers has a narrative coherence problem.
Holdings Stability
Are large, unexplained position changes occurring between reporting periods? Instability without explanation is a governance concern.
Narrative-Quant Coherence
Does the narrative in fund documents align with the quantitative signals? Material disconnects between what the fund says and what the data shows are flagged at this dimension.
TMD / DDO Alignment
Does the fund's actual volatility and risk profile remain within the bounds described in its Target Market Determination? Breaches here have direct regulatory implications under DDO obligations.
Access
Three ways to access NexFundAI
NexFundAI is available through three access paths. As an embedded capability within a wealth platform or dealer group's existing infrastructure — integrated via API into your current systems and workflows. As a standalone institutional subscription for research houses, asset consultants, and super fund investment teams. And as a direct REST API feed for technology teams building fund selection, portfolio construction, or risk management tools that need a machine-readable behavioural integrity feed.
Commercial arrangements are tailored to the partnership. Get in touch to begin the discussion.
Blueprint
Download the NexFundAI Due Diligence Methodology Brief
The NexFundAI methodology white paper — a full technical description of the scoring framework, quantitative methods, and AI document analysis architecture — is in preparation. If you would like to be notified when it is published, add your details below and we will send it to you directly.
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