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Vital role for Insight risk team

Insight Investment says its risk management team is crucial to running its multi-asset funds and pricing structured products in volatile markets.

Fund managers Mike Pingerra and Steve Waddington tap into other areas of Insight’s business, which include risk management, but having a specialist team to price structured products allows them to spend more time focusing on managing portfolios. The risk team calculate structured product prices independently of the multi-asset team and the counterparties involved.

Waddington says there can be huge swings daily in prices and twice this year its risk team has notified the counterparties that their prices were incorrect.

Insight’s multi-asset funds can also invest directly in derivatives and in securities such as gilts. This can be more cost-effective than investing in a fund and removes counterparty risk that may be an issue with structured products.

He says: “Given this level of flexibility in difficult market conditions where achieving diversity is not easy, the multi-asset team finds risk management invaluable. We want to be able to invest in markets quickly and may use futures to manage market exposure rather than switching in and out of funds. Independent risk assessment is paramount to running a portfolio in this environment.”

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