MSCI: Analyze Key Drivers of Risk and Return
MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 50 years of expertise in research, data and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios.
Open architecture platforms such as the Charles River Investment Management Solution (Charles River IMS) address the need for robust and flexible portfolio analytics by ensuring interoperability with a growing ecosystem of third-party providers such as MSCI, whose products, services and content are directly accessible from Charles River IMS workflows.
Risk factors are granular attributes of one or more asset classes that explain risk and return. Fixed income factors include interest rate, credit and prepayment risk. Factors can also include macroeconomic variables such as inflation, GDP growth, productivity, and commodity prices that impact multiple asset classes. Constructing portfolios based on established, well researched factors, rather than asset classes, can theoretically improve portfolio diversification, minimize undesirable correlation risk, and deliver better risk adjusted performance.
A Single, Consistent Portfolio View
Our Manager Workbench provides a single, unified desktop for managing risk and portfolio workflows, with a common data set, reference data and factor analytics. Risk exposures are updated in real time and displayed directly in the workbench, so managers can make decisions based on the latest data. Manager Workbench offers full support for factor-based risk decomposition reporting, with out-of the-box views for active risk, risk factor contribution, tracking error and volatility. Portfolio managers can make decisions based on the risk/return profile of individual securities and their impact on the overall portfolio and investment strategy, based on an intuitive factor model covering the full spectrum of products, sectors and global markets. MSCI’s risk analytics include differentiated capabilities in securitized products, municipal bonds and bank loans. This provides a consistent risk decomposition framework to support single security analytics. Managers can decompose relative and absolute portfolio performance with top-down and bottom up approaches that take investment strategies into account.
Adding new and differentiated analytical capabilities to the Charles River platform will help clients adapt to changing market conditions, investor preferences and regulatory mandates. Establishing relationships with leading analytics providers, such as MSCI, offers investment managers the greatest choice of portfolio, risk and attribution capabilities on a single platform.
Global Head of State Street Alpha
Packaged Workflow
Charles River IMS provides packaged workflows that make risk and performance capabilities an integral part of the portfolio management process. These include factor model-based asset allocation, dynamic hedge construction, and portfolio stress testing. This enables asset managers to eliminate multiple point solutions and spreadsheets, so their front office teams can work more efficiently and avoid unproductive reconciliation between disparate systems.
Collaborative Decision Making
A shared, consistent view of risk metrics and asset valuations promotes collaboration across the front and middle office. Compliance officers, risk analysts, portfolio managers and traders can work more closely to implement investment ideas, manage risk, and understand the factors driving performance. A consolidated view of portfolio holdings and performance metrics also expedites client reporting activities by providing visibility into the manager’s asset allocation and targeting decisions.
Streamlined “What-if” Modeling
Interactive what-if modeling of portfolio construction and de-risking activities provides immediate feedback on how those activities will impact the portfolio. Managers can deploy MSCI’s ready-to-use, forward-looking macros, stress scenarios, and multi period stress testing. Additionally, managers can understand portfolio risk impacts of proposed trades, compare trade ideas selectively, and incorporate compliance rules and other constraints in scenarios.
Faster Time to Information
The platform eliminates overnight batch processes, providing an always-current intraday view of the portfolio, inclusive of new securities, trade confirmations and proposed trades and their impact on the portfolio.
Strategic Partners
MSCI Portfolio and Risk Analytics in Charles River IMS
Investment managers, asset owners, insurers, and wealth managers can now access MSCI Portfolio and Risk Analytics from the Charles River Investment Management Solution
Steve Milanowycz
Senior Director, Product Management - Front Office
Frank Smietana
Head of Thought Leadership & Content Strategy
Strategic Partners
Charles River and MSCI to Provide Differentiated Risk and Portfolio Analytics
Charles River clients will be able to use MSCI’s portfolio and risk analytics, enabling access to MSCI’s industry-leading capabilities and content in multiple asset class factor modeling, stress-testing, statistical analysis (VaR), and optimization.
Portfolio, Risk and Attribution Workflows for Muni Bonds Leveraging MSCI Analytics
Tax benefits and historically low default rates make municipal bonds a sought-after asset class for both high net-worth and institutional investors.