S&P Capital IQ will roll out a new version of its Portfolio Risk solution this week packaging risk and scenario analytics with market data and fundament data to deliver real-time risk analysis for multi-asset class portfolios.
The redesigned risk solution brings together the risk and portfolio analytics expertise acquired by S&P Capital IQ with R2 Financial Technologies in February 2012 and S&P Capital IQ’s market and reference data. It is a hosted solution and available immediately on the S&P Capital IQ desktop, offering traders, portfolio and risk managers the ability to make decisions about the pricing, hedging and capital management of multi-asset class portfolios in real time.
While the hosted version of Portfolio Risk is expected to be taken up by existing and new clients – with smaller clients particularly favouring the solution on the basis that it includes both analytics and data, and offers reduced cost of ownership through hosting – the initial deployed version of Portfolio Risk will continue to be available. This version of the software, which requires a link to data services, is expected to continue to be the choice of large funds and investment managers that want to retain control of their operating environments.
The hosted version of Portfolio Risk covers a diverse range of asset classes from cash, fixed income and equities to exotic derivatives and includes instrument pricing, portfolio analytics, scenario analysis and stress testing. Users can take advantage of interactive portfolio dashboards to aggregate data or drill down to a detailed level of fundamental financials and research. The software also supports communication and collaboration around risk and investment strategies, for example, allowing colleagues to chat in the system and highlight points in reports that they want to share.
Coming next year is an extension similar to Amazon’s capability to offer customers products on the basis of what they have previously bought or looked at on the website. Portfolio Risk will learn what users do on the system, perhaps the kind of reports they ask for, and will number crunch and create relevant reports without users requesting them.
Dan Rosen, managing director at S&P Capital IQ and former CEO of R2, explains: “We have spent the past year integrating the analytics we built over six years at R2 and working on content for Portfolio Risk including data, pricing, terms and conditions, fundamentals and news. We are making risk intelligent with a solution that is very interactive and includes real-time analytics, powerful scenario analysis, and the capability to zoom in and slice and dice data.
“The software has an intuitive user interface that can be used by business and risk managers, and we are packing in content from S&P Capital IQ and third-party partners, including industry researchers and analysts. It is possible to run research against a portfolio and see the effects of the research findings on the portfolio in real time and share these results. Portfolio Risk is a relatively simple concept, but a powerful, quick and interactive solution.”
S&P Capital IQ has worked with a few clients to develop Portfolio Risk, responding to their requirements for transparency of methodologies, rather than numbers from a black box, and their desire to drill down into data and look at it in many different ways. Rosen says buy-side firms wanting to analyse multiple-asset portfolios are the sweet spot for Portfolio Risk and expects early customers to include multi-asset funds, hedge funds and asset managers with multiple strategies that want to use the same tool for middle office risk reports and front office portfolio management. The cost of ownership of the hosted solution, which includes market data, is expected to be significantly lower than a deployed risk management solution to which market data must be added.
Looking forward, Rosen says that over the next year or so he and his team will continue to add content and collaborative tools to the platform, as well as a next generation graphical user interface that is being developed for broad use across S&P Capital IQ products.
Summing up Portfolio Risk, S&P Capital IQ president, Lou Eccleston, says: “In just over a year since our acquisition of R2, we have successfully brought together risk data, sophisticated analytics and relevant market commentary, news and analysis. The result is that our clients can quickly generate a transparent, customised risk picture enabling them to react quickly to changes in the market and new investment ideas.”