Unmasking risky business
| Le Marois: Riskdata identifies
risk while protecting proprietary
New technology is being developed to make hedge funds more transparent to investors. Risk management system provider Riskdata and Equalt, the alternative investment arm of Crédit Agricole Indosuez, are developing software to enable institutional clients to simulate the risk profile for different combinations of funds before they invest. They are working on an application for Riskdata's online risk management system. Initially it will enable investors to test how the Equalt fund would fit with their portfolios. "It's like opening a window on what we have on the book without disclosing actual positions," says Christophe Turpault, manager of Equalt's fixed-income arbitrage fund. This gives institutional investors more transparency about the risk of including funds in their portfolios. At the same time it allows the manager to protect the funds' positions.
Riskdata and Equalt want investors to be able to blend funds to discover the impact such strategies will have on their risk profiles. "Take a fund selection company," says Turpault. "They have proposals from more than 1,000 funds. Imagine if they [the funds] all contribute their risk ticker [risk characteristics] to a central platform and they [fund selectors] can use it.