Builds on RiskFirst Partnership for Pension Plans
VALLEY FORGE, PA (September 10, 2018)— Vanguard today announced an expanded partnership with RiskFirst, a leading financial technology company, to provide its institutional nonprofit clients with the same innovative risk management solution, PFaroe, that pension clients have utilized since 2016. Vanguard is one of the first firms in the asset management industry to offer PFaroe to its outsourced chief investment officer (OCIO) foundation and endowment clients. The tool supplements Vanguard’s risk management capabilities and offers a comprehensive analysis of portfolio risks.
“In an industry where every penny lost on investment underperformance undercuts a nonprofit’s ability to fulfill its mission, it’s critical that organizations truly understand the risk exposures within their portfolios, as well as the source of returns,” said Christopher Phillips, principal and head of Vanguard Institutional Advisory Services. “This tool maximizes our ability to stress-test, in real-time, a variety of scenarios an endowment or foundation may face—from gifting amounts and increases in the donor pool to inflationary and economic shocks—and assess the impact on future cash flows.”
Vanguard first partnered with RiskFirst to provide PFaroe’s asset-liability stress-testing capabilities to its pension clients. RiskFirst recently launched a new version of PFaroe to also serve institutional foundations and endowments, enabling all of Vanguard’s OCIO clients to access the industry-leading risk management and modeling technology.
Despite a prolonged bull market, many nonprofits have struggled to generate the returns needed to cover costs, and have reached for riskier, less liquid, and more costly investment products in their search for alpha. According to the NACUBO-Commonfund Study of Endowments, colleges and universities allocated an average 52% of their portfolios to alternatives last year. In looking at the longer-term impact of these high-cost strategies, endowments had average annualized ten-year returns of 4.6% in 2017.
“With risks for institutional investors being so multifaceted, solutions like PFaroe become an absolute imperative to help asset owners understand the investment and enterprise risks they are truly running,” Matthew Seymour, CEO, RiskFirst, said. “All too often risks such as the critical importance of maintaining real spending rates in perpetuity are forgotten or overlooked, by focusing solely on investment risk. These risks are even more relevant in the current low yielding fixed income and volatile equities markets, coupled with threats of prolonged inflation and shrinking returns from investments in alternatives.”
Vanguard Institutional Advisory Services: A time-tested, trusted OCIO
Vanguard has provided OCIO services to pension plans, foundations, and endowments for more than 20 years. The firm offers a full range of advisory and discretionary services, and works as an extension of the board and investment staff. As an OCIO, Vanguard partners with clients to build an asset allocation strategy and implement it, providing ongoing oversight and management—enabling clients to focus valuable time and resources on broader strategy planning and key initiatives. With more than $43 billion in OCIO assets under management, Vanguard is one of the largest and most trusted OCIO providers in the industry.
Vanguard is one of the world’s largest investment management companies. As of July 31, 2018, Vanguard managed more than $5.2 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers more than 400 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.
RiskFirst is a financial technology company providing modern technology solutions to asset owners, consultants and asset managers to help grow and improve their businesses.
PFaroe® was launched in 2009 to deliver a modern and effective software solution for institutional investors to manage their investment and liability risks. PFaroe is now the market leader in technology supporting defined benefit pensions across the UK and US. Over 2300 plans with more than $1tn in assets are now modeled on the PFaroe platform. More recently, RiskFirst has launched a separate PFaroe solution for the risk management of endowments and foundations, as well as performance attribution for investment managers.
RiskFirst’s approach and products are asset owner-centric and offer a unique ability to bring together asset owners, consultants and asset managers. Its technology suite covers risk, investments and liabilities. They are flexible, intuitive and ever-evolving.
For more information please go to www.riskfirst.com. All asset figures are as of July 31, 2018.
All investing is subject to risk, including the possible loss of the money you invest. Past performance is no guarantee of future returns. Advice services offered through Vanguard Institutional Advisory Services® are provided by Vanguard Advisers, Inc., a registered investment advisor.