Fiduciary risk evaluation benefits escape HK plan sponsors

European and US fund managers are used to having their business structure and investment process examined by fiduciary risk rating agencies, but it seems such demand does not exist in Asia.

Unlike fund trackers that rank investment funds based on past performance, a fiduciary rating is supposed to forewarn investors about the reliability and organizational ability of a manager, in terms of providing a consistent level of performance. And while a credit rating assesses the risk of default by a borrower, a fiduciary rating evaluates a managers ability to protect and enhance the value of assets entrusted to it by clients.

Some managers break fiduciary risk down to market risk, liquidity risk and credit risk. But Swiss-based fiduciary rating agency RCP Partners, for example, groups a managers fiduciary profile under two families of risks structural risk and performance risk.

Structural risk focuses on...

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