Institutional Investor
Risk Analytics
Portfolio Clarity
Institutional Investor
Risk Analytics
Portfolio Clarity
How a Healthcare System Leverages Solovis Risk to Help Support Key Investment Decisions
Solovis Insider
Introduction
Solovis Risk Pro enables investment teams to make data-driven decisions with confidence across a variety of global clients. This spotlight focuses on a University Healthcare System with approximately $9 billion in annual revenue and $9 billion in investments. Those investments support operations in the short term and, over the long term, fund growth and maintain purchasing power to keep pace with healthcare cost inflation and wage growth.
The key Risk Pro user has served as Deputy CIO for over a decade and manages strategic partnerships for the institution.
The Challenge: Disconnected Tools and Intra-Month Data Gaps
Prior to Risk Pro, this client had a variety of consulting, risk management, and spreadsheet tools at their disposal. Those tools were not user-friendly, made it difficult to import and export data, and often lacked guidance on the highest-value use cases. The team also needed a solution to analyze risk and performance intra-month to support key business decisions and address the data lag inherent in private market investment risk assessment.
How Risk Pro Transformed Their Investment Process
Risk Pro provides an intuitive interface where populating and accessing market data is simplified and the use cases for its features are clear. The platform facilitates conversations and supports investment decisions across three areas.
Manager Evaluation and Risk Insights
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“When we are underwriting a hedge fund or a diversified manager, we want to analyze that manager's return stream to see if the fundamental work we have done on our thesis has played out quantitatively. In particular, we are not only interested in the Sharpe ratio of the manager's returns, but how the manager interacts with the rest of our diversified portfolio by evaluating its correlation to other managers and beta to markets. We want to add unique managers doing different fundamental jobs, and Risk Pro is helpful for easily assessing each manager's correlations, market beta, and the residual risk and return. Furthermore, Risk Pro helps us identify if certain managers are more loosely correlated to each other than expected, and understand why that might be by easily comparing them in different regimes." Deputy CIO | University Healthcare System |
Portfolio Construction and Analysis
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"We periodically evaluate our portfolio across various objectives and ask questions such as: Are certain managers an anchor to the portfolio, and is that good or bad? Are we in a certain financial regime that presents a good opportunity for one strategy over another? In what regime might we want to be in strategies or managers we currently do not favor? We can utilize Risk Pro to see which managers should be emphasized based on our views of different market regimes. If Risk Pro's output does not favor a manager that we fundamentally like, it is also helpful to understand why that may be. Risk Pro helps enable interesting conversations about the diversifier portfolio and which managers to emphasize given the purpose of the asset class and market views." Deputy CIO | University Healthcare System |
Easy Comparisons and Idea Testing
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"Risk Pro is a tool that is helpful in making a decision on a handful of competing ideas or just testing ideas side by side to see how they differ across the gamut of factors and market stress analysis. Sometimes it is nice for the human brain to simply view various metrics side by side, and Risk Pro allows for that." Deputy CIO | University Healthcare System |
Looking Ahead: Building a Center Book
This firm is exploring the concept of a Center Book, comprising their best investment ideas across various asset classes. The goal is to better understand the impact of potential allocation and exposure changes.
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"Risk Pro has been useful in analyzing the various return streams of possible upsized positions to see how accretive they might be to the portfolio's overall risk and return. Risk Pro also enables the team to simulate how the portfolio may be impacted if certain exposures and allocations are changed at various levels, from single stock exposures to strategies. This will be a concept that has a rigorous risk framework around it, and Risk Pro will be useful to construct these portfolios and help manage risk." EDeputy CIO | University Healthcare System |
The firm also intends to enhance its analysis of private market returns by leveraging analytics available in Risk Pro, including desmoothing, interpolation, and extrapolation capabilities.
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""We keep trying to use other tools,s but I keep coming back to Risk Pro." Deputy CIO | University Healthcare System |
Solovis Risk Pro
Healthcare investment offices managing multi-billion dollar portfolios need tools that support intra-month decision-making, manager evaluation, and portfolio construction across public and private markets.
Solovis Risk Pro provides an intuitive platform for factor analysis, correlation assessment, regime-based manager evaluation, and private market analytics. Teams gain the clarity and control needed to support Investment Committee discussions and make data-driven allocation decisions with confidence.
*The Solovis subscriber featured on this page was not compensated for their statements. As a Solovis subscriber, their use of portfolio analytics or other Risk Pro features and their experience could differ from your organization's due to their particular use of Risk Pro, the version of Risk Pro used, or other factors. Not all subscribers will be equally satisfied. The person providing this testimonial was selected based on a variety of factors, some of which are subjective. This document is for informational purposes only. Not an offer to buy or sell securities.