SWITZERLAND - Swiss risk and asset management Fundo is working together with Vevey-based food firm Nestlé on an "open source-minded" financial risk management system, IPE has learnt.
Jacques Grivel of Fundo told IPE it is worlking on a "Wiki or open source-minded" solution through which the pension funds industry will also be able to evolve and evaluate the web-based system itself by adding its own slant.
Jean-Pierre Steiner, chief executive of Nestlé Fonds de Pensions, told IPE: "We are just looking at an easy-to-use but reliable tool for risk budgeting, and what Fundo has developed seems to work - the tool has worked marvellously well during this crisis - so it is certainly worth taking a closer look."
He added, however, no decision had been made yet on the implementation of the system: "It is work in progress, we are talking to each other, but it is premature to reveal anything to the outside world."
The system is based on the principal of dynamic process regulation to reduce portfolio volatility and protect long-term returns, focusing on market risk in a financial portfolio resulting from movements in equity prices, foreign exchange rates,
interest rates and commodity prices.
The company decided to set up a standard risk measurement system for pension funds, working together with Nestlé, since it believes Solvency II is not suitable to the pension fund industry.
IPE reported last week Robusta, the Irish-listed fund vehicle for Nestlé's small- to medium-sized pension investments, had terminated Mellon Global Investments and JP Morgan Asset Management. (See earlier IPE story: Nestlé fund axes underperforming Mellon, JP Morgan)
Steiner and Nestlé confirmed the pair were replaced after "unsatisfactory performance".
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