Northern Trust signs Thames River Capital to new daily risk monitoring service

Source: Northern Trust

Northern Trust has expanded its range of investment risk and analytical services with the launch of a new capability enabling asset servicing clients to monitor and report on the investment risk in their portfolios on a daily basis.

At the same time, Northern Trust also announces that it has been appointed by Thames River Capital, a major London-based fund manager, to provide a new daily risk analysis and performance attribution reporting service as part of a recently extended mandate with Thames River Capital that now encompasses performance and risk analytics, as well as custody and fund administration, for some US$13 billion in assets.

Northern Trust's new daily risk monitoring service is based on highly complex analytics technology that enables clients to see where the risk lies in their portfolios and how changing external factors are expected to impact the degree of risk inherent in their portfolios. Risk data can be delivered online to the fund manager's technology architecture, for them to analyse and report on as necessary.

Risk in portfolios can be broken down into different categories, and the Northern Trust service makes it possible for an investment manager to analyse Relative Value at Risk ("VaR") and Absolute VaR. Northern Trust can also run scenario-based analysis to both back-test and stress-test client portfolios in up to 200 different scenarios, for example, to look at the impact of an interest rate shift on the risk in a portfolio and how it would be expected to perform as a result.

"Our new daily risk monitoring capability is an important addition to our range of investment risk and analytical services aimed at asset managers," said Ian Castledine, Senior Investment Risk & Product Development Consultant within Northern Trust's Investment Risk & Analytical Services group. "We are seeing an increase in demand for daily risk monitoring in the light of UCITS III regulation especially where over-the-counter derivatives are used. Our new service means that clients can trade these instruments and see, daily, how they impact the risk in a portfolio," commented Mr. Castledine.

Thames River Capital has just finished implementing both the new daily risk monitoring service from Northern Trust as well as its performance measurement and attribution engine across a range of assets spanning offshore long-only UCITS III equity, credit and property funds as well as long-short hedge funds.

Jeremy Charles, Chief Operating Officer of Thames River Capital, said, "We had been looking at IT solutions for both risk reporting and performance attribution as part of our objective to provide investors with greater understanding and transparency of the investment risk and performance in our funds. Northern Trust, with all our fund data in its accounting and custody systems, was in an ideal position as a potential solution provider and helps solve the problem of data management across applications. We are extremely pleased that Northern Trust has decided to offer this new integrated service direct to our desktop and we look forward to a deeper relationship with them."

"We are delighted that the existing relationship between Northern Trust and Thames River Capital has expanded. The product solution that we are providing to Thames River Capital leverages the benefits of Northern Trust's single, global operating model and currently includes a range of fund administration and custody services across multiple jurisdictions," said Toby Glaysher, Head of Northern Trust's U.K. Global Fund Services group.

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