The Investment Management Association of Singapore (IMAS) has released a package of what it calls “best practice guidelines” aimed at helping investment management firms structure and manage both their risk and performance analysis operations.
IMAS, the members of which have combined assets under management equivalent to almost £400bn, claims it is the first industry association of its type to publish such a code, which it calls Guiding Principles for Investment Risk & Performance Analysis.
“These guidelines set out the key areas of focus and best practices in measuring risk and performance, and we hope they will be useful to investment managers, whether they are large international firms or small local boutique firms,” said Trevor Persaud, chairman of IMAS’s risk and performance committee.
Persaud said IMAS developed the guidelines to “work in concert with well-established standards, such as the Global Investment Performance Standards”.
The Global Investment Performance Standards (GIPS) were first introduced in 1999 by a body then known as the Investment Performance Council, and consist of a standardised set of industry-wide ethical principles designed to help guide investment firms in the calculation and presentation of their investment results to prospective clients. IMAS is a sponsor of the GIPS, the use of which the CFA Institute also actively promotes, and which it publishes in book form.
The IMAS guidelines, which may be viewed and downloaded in a 16-page Pdf document (1011_IMAS_Guiding_Principles_for_Investment_Risk_Performance_Analysis_Functions_20151116_-_Final) cover three main areas: governance; investment risk management; and performance analysis.
A ‘critical’ skill
Explaining the thinking behind the creation of the IMAS set of principles, Persuad said it was thought “critical” that investment managers be able to measure, analyse and manage the risk and return of their products to a high standard.
“Many of the structures, systems and processes in place in firms currently have grown organically over time or in response to global regulation,” he noted.
The IMAS, he added, found that currently “there are significant variances in how risk management and portfolio analysis functions operate” in many investment businesses.
IMAS chairman Nicholas Hadow said the guidance is “consultative rather than prescriptive”, but emphasised that governance was central to the document.
“The release of these guidelines represents an important contribution to the discussion on risk management and performance analysis not only in Singapore but also in the wider industry,” he said.
IMAS represents more than 100 investment managers with assets under management of more than S$800bn (£370bn). It was founded in 1997, and says it seeks to “foster high standards…and exemplary practice” in the Singaporean investment management industry.