SACRAMENTO, Calif. - When the nation's largest pension plan wanted to enhance portfolio visibility, it needed a software package with a broad view.
The California Public Employees' Retirement System, with $151 billion in total assets, uses more than 70 external asset managers covering nearly every conceivable asset class and has about $70 billion managed internally. That doesn't include all of the custodians, brokers and other plan services involved in the investment management process. At the plan level, that's a lot of vendors, assets and time-sensitive information to track.
That's where Insignis Investment Data Management Services comes in. Insignis is a 4-year-old Chicago-based software and investment data service provider. CalPERS selected Insignis in March to help enhance portfolio visibility and improve data automation. When operating, Insignis will link directly with each outside CalPERS money manager, custodian, broker and portfolio service provider and funnel the information from each into a single report. The reports will be delivered "in a way that they can use," said Insignis Chief Operating Officer Brian Winne.
It's not as simple as it sounds. Insignis must establish a direct link with each money manager, custodian and broker, both domestic and internationally, collect the appropriate portfolio data and aggregate that data, some of which requires translation, into a consistent format and then deliver an accurate electronic file or report every day.
"This is an information service; if the plan sponsor does this themselves it quickly becomes a very labor intensive or IT intensive undertaking," said Mr. Winne.
And that's exactly what CalPERS was attempting to do before it found out about Insignis. CalPERS officials declined to discuss the Insignis system, claiming it hasn't been operational long enough to talk about. But Insignis officials were talking.
"CalPERS had a two-year plan to do the things we do before they found out about us and took a significant amount of time off their time line," said Mr. Winne.
"When you have a large portfolio, especially those like CalPERS, you have a variety of service providers, money managers, brokers, custodians - all handling major pieces of the portfolio," said Mr. Winne. "There are going to be difficulties in collecting the transaction information and bringing it together from all those different places into a complete view to help manage the portfolio."
"The connectivity with each provider can be difficult, especially with some of the more sophisticated portfolio managers such as derivatives and asset managers located in various places around the world. It can be incredibly complex," said Mr. Winne.
The information gathered by Insignis Investment Data Management Services provides a total view of the entire portfolio: stock positions, holdings, volatility and information about each money manager, including performance data.
Insignis will provide CalPERS with aggregated transaction and position data related to its derivative investments.
"In the derivatives area, we provide an understanding of what the underlying securities are," he said, "You will know what your exposure to a particular company across all your managers really is."
"We can be as granular with the information as needed," said Mr. Winne. "What we deliver is at the discretion of the plan."
CalPERS, for instance, requested the system have a direct interface with its portfolio risk management program, the BARRA Total Risk System, he said.
While CalPERS officials declined to discuss the Insignis implementation, Patricia Pinkos, CalPERS senior principal investment officer who oversees asset allocation management, said in a news release: "We were seeking a method of improving the timeliness and accuracy of investment data used in our risk management system. The Insignis service provides us with improved portfolio visibility and the ability to evaluate risk based on more reliable information."