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LPNEWS

Ascendancy Of The Chief Investment Operations Officer

by investmentmagazine.com.au posted 1year ago 254 views
<p>Inside some of Australia&rsquo;s largest investment funds, chief investment officers and portfolio managers are finding it increasingly difficult to implement portfolio decisions without getting a final tick of approval from their back-office colleagues.</p> <p>The decisive role of operational due diligence in investment manager selection and monitoring is increasing, with leading funds ranking it alongside investment due diligence &shy;&ndash; or even above it in some cases.</p> <p>Jonathan Green, who is general manager of investment implementation and operations at the $72 billion New South Wales Treasury Corporation (TCorp), says the fund has a board policy that sits operational and investment due diligence alongside each other.</p> <p>&ldquo;We have a board policy that underpins our case and that manages service providers through two lenses &ndash; investment and operational due diligence. They are equivalent and both have to be satisfied before a manager can be appointed. In the past 12 months, we have had an instance where the investment case has passed but operational due diligence hasn&rsquo;t,&rdquo; he told delegates at the 20th&nbsp;annual Conexus Financial Investment Operations Conference in Sydney on Tuesday.</p> <p>&ldquo;We have a set of things we look for as base information, such as a separate chief risk officer to the chief investment officer. In this we try to systemise it as much as we can, and get baseline information. We operate a T+1 cycle. If a manager can&rsquo;t provide us with data in that time frame, then it&rsquo;s an outlier,&rdquo; Green continued. &ldquo;This is not about the one-off looking under the hood, but the ongoing management of it.&rdquo;</p> <p>TCorp has explicit and implicit elements to its operational due diligence, with a sound governance framework. It aims to capture data and systematically harness it.</p>