Aberdeen Standard Investments’ (“ASI”) Private Markets Solutions team and the Centre for Risk Studies at the University of Cambridge Judge Business School (“Cambridge”) today announced a strategic collaboration.
In order to deal with the complex and opaque nature of investing in Private Markets, ASI’s Private Markets Solutions team has developed a Private Markets Investment Sensitivity Model (“PRISM”) to initially be a tool in the management of ASI ‘s flagship Global Private Markets Fund. Integration with Cambridge’s substantial library of scenarios built upon their Science in Scenarios™ platform will provide quantified views across ASI’s investment portfolios from a wide array of real-world risks.
PRISM analyses the components of performance drivers for the assets in the portfolio, including global macro, markets specific and idiosyncratic factors. It draws from and utilises specific data points from each investment to assess future exposures and expected performance of investments – private equity and debt, infrastructure and real estate – that have long term horizons and are notionally illiquid.
Nalaka De Silva, Head of Private Market Solutions said: “As Private Markets become an increasingly material part of client portfolios, portfolio construction and risk management must be at the centre of the investment process. We are very excited about building on our framework with the team at Cambridge and sharing the insights it generates with our clients.
By adding real-world scenario capability to the PRISM framework via the collaboration with Cambridge, PRISM will seek to quantify the effects of a wide variety of potential and emerging risks on a portfolio. Cambridge’s scenario suite provides industry standard stress tests covering a selection of threats from a structured taxonomy of business risks. The Cambridge scenarios have been established from extensive research to assess and quantify potential emerging threats that could arise from Financial, Geopolitical and Technological risks along with those that stem Environmental, Social and Governance considerations. This type of capability is timely given the complex impact of COVID-19 on private markets assets.
Andrew Coburn, Chief Scientist at Centre for Risk Studies, Cambridge commented: “This collaboration allows for the interaction and analysis of our own risk research with portfolios of private markets assets from a global asset manager. This is a unique and valuable insight and we look forward to working with ASI ”.
Campbell Fleming, Global Head of Distribution at ASI said: “Our clients want and expect data driven analysis similar to what they already receive for their public market investments and also for us to leverage our research capabilities hold to better inform investment decisions. We believe ultimately that PRISM will not only be an important tool for us to use in managing our Private Markets portfolios. Ultimately pension funds, insurers and sovereign wealth funds could employ to assess and monitor their Private Market investments.”