Portfolio oversight explained by industry experts

Date: April 9, 2013

Recent high profile cases in the press are highlighting the lack of oversight of funds within the investment community. 

Today there is an increased demand for transparency from regulators and clients. Demands for the net asset value (NAV) of a fund to be instantly made available or for stress tests to be run are ever more prevalent, so in 2013, it is imperative that effective oversight can be demonstrated.

So what exactly is portfolio oversight and why is it so important?

Oversight is the monitoring of a portfolio’s performance and risk to ensure that investor interests are being adequately protected. Oversight is often managed by a third party but can be conducted in-house as well. Third parties can be Authorized Corporate Directors (ACDs) but are also often Directors on the Board, Trustees, Management Companies (ManCos) and Series Trustees in North America.

There are different types of investment structures around the world and today the focus is on this. Should the focus be more on the underlying investment process rather than the structure and does it have an impact on the way oversight is conducted?

Who is responsible for oversight in different jurisdictions?

How can oversight be improved and what role can technology solutions play?

To improve oversight, two main things are required:

  • The right data/tools
  • The right analytical skills

There are several challenges relating to the data that need to be addressed. Is the data timely? Is it frequent? Is it reliable? Can it be shared easily and securely? These are fundamental questions which impact the quality of any oversight function.

Do fund boards have a skills gap in analyzing and interpreting the data that needs to be filled? Both the right tools and the right skills are crucial so that the board of directors can ask the right questions to the fund managers and thereby make the oversight process more effective.

Is it just enough to analyze fund performance? What about measuring risk and looking at parameters such as VAR to get a more complete picture?


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Join us for Part 2: Operationalizing the SEC's New Disclosure Rules, for Shareholders on December 12.