Time for Endowments to Better Assess Risk When Making Portfolio Strategy Decisions, Says New RiskFirst Report

Endowments and Foundations (E&F) currently define success by their
position in published performance league tables – which can lead to
similar asset allocations across the board. But a new report from
RiskFirst suggests that by evaluating risk in the context of spending
requirements E&F can capture more meaningful insights and design more
portfolio strategies for their situation.

NEW YORK–(BUSINESS WIRE)–Assessing both risk and returns together is crucial for effective
portfolio management according to RiskFirst’s new report, A
new approach to setting endowment and foundation investment strategy
.
The report concludes that risk should be assessed just as performance is
and that, taken together, this could aid the design of an optimal
portfolio geared to a specific E&F’s characteristics, goals and
objectives.

Simon Robinson, Head of Product Management, RiskFirst, explains:
“Currently, the success paradigm for E&Fs is heavily based upon
performance relative to comparable institutions, as highlighted by
published performance league tables. But is beating comparable
institutions, or even Yale, really the best objective for all? Where
does ‘risk’ fit in to the success paradigm, and how do we determine
‘risk’?”

With a lack of available statistics on E&F risk in the market, RiskFirst
examined the population of endowments modeled on its technology
platform, PFaroe, over recent years, and proposes a methodology for the
incorporation of objective risk measures into the determination of E&F
portfolio strategies – defining a new way of looking at risk that is
more specific to the institution.

Matthew Seymour, CEO of RiskFirst, says: “Technology is allowing E&Fs to
define a framework for risk that reflects the objectives and risk
tolerances of the E&F’s sponsoring organization. For CIOs and
consultants, leveraging today’s technology through appropriate risk
software tools empowers the optimization of performance within
quantifiable risk parameters.”

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About RiskFirst

RiskFirst is a financial technology company providing modern
technology solutions to Asset Owners, Consultants, Insurers and Asset
Managers to help grow and improve their business. Its core product
PFaroe® is web-based, available anytime and anywhere, and allows users
to evaluate risk from multiple perspectives and to perform real-time
scenario stress testing. Initially targeted to defined benefit pension
plans, it is now the market leader in the UK and the US. Over 2,500
plans with more than $1tn in assets are now modeled on the PFaroe
platform. RiskFirst has also recently launched a global fixed income
attribution solution, which recognizes the differing objectives,
timeframes and opportunity set of each user.

For more information please go to www.riskfirst.com.

Contacts

Anna Sharrock
London: +44 7811 758964

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