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Call for more transparency in fund management

>> Wednesday, September 16, 2009

A committee set up by the Investment Management Association of Singapore (IMAS) is calling for an alignment of standards to help fund managers in their risk-assessment processes.

A new IMAS survey on risk and performance practices among fund managers found that two-thirds of the 22 respondents have independent risk units, but use largely different standards to assess risk.

The findings are significant because the 22 fund houses that responded represent 80 per cent of the assets under management in Singapore, said Mr Justin Ong, advisor to the Singapore Performance and Risk Committee.

In the wake of increased claims of mis-selling of financial products to both institutional and retail investors, the committee said that there is heightened concern among investors, who are demanding more transparency about risk controls.

There is already a global best practice in the form of the Global Investment Performance Standards (GIPS), a set of standardized, ethical principles that provide investment firms with guidance on how to calculate and report investment performance. One of these standards includes preventing cherry-picking the best performing accounts to show investors, as this can be misleading.

In the survey, 57 per cent of the respondents are compliant with GIPS, and 24 per cent are working towards being compliant. The committee is now focusing on getting more fund houses to comply.

This standards were first adopted by Singapore in 2005, but some institutions here have not kept up by verifying these standards in the recent years, said Mr Ong, adding that "it's seen as a nice to have".




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