By Alysha Webb
HONG KONG — Eighteen asset managers handling the investments of four lifestyle funds led to a risk assessment headache for the US$3 billion Hospital Authority Provident Fund Scheme of Hong Kong.
In an effort to get a better handle on the risk of the total fund and each of its four components, fund officials turned to the TotalRisk enterprise management system of Barra Inc., Berkeley, Calif.
Each of the 18 managers invests a portion of each lifestyle fund, and previously each manager submitted a monthly performance report with risk level and numbers to the fund. But with so many different managers working on each fund, "it was very difficult to have a very holistic picture of the risk level of each fund," said Winnie Pao, director of investment supervision for HAPFS.
Different managers also had different methods of reporting risk and return.
Using TotalRisk allows fund officials to evaluate individual managers' performance, and each fund's risk level, she said. "With a tool like Barra's system, you can more or less identify the sources of outperformance or underperformance in each manager."
Barra's TotalRisk system helps HAPFS make sure all four funds are running in line with the original risk level targets, said Ms. Pao. It identifies the makeup of the risk in the fund, generates an active list of risk by manager and the total active risk of the fund.