J.P. Morgan Launches First Custodial Tool to Help Superannuation Funds Me APRA Guidelines on Risk Disclosure

J.P. Morgan’s Online Portfolio Analytics Lab (OPAL) enhances risk management and reporting capabilities for clients

Sydney, August 30, 2012 — J.P. Morgan Worldwide Securities Services (WSS) has today announced the launch of its Online Portfolio Analytics Lab (OPAL), an innovative new technology service which utilises extensive portfolio analytics tools to help institutional investors assess risk across individual portfolios, and optimise asset allocation and investment manager selection.

One of the many interactive capabilities of OPAL, specifically targets Australian superannuation funds working to comply with Financial Services Council (FSC)/Association of Superannuation Funds of Australia (ASFA) guidance on the disclosure of investment risk in the new Shorter Product Disclosure Statements (SPDS) regime, via the “Standard Risk Measure” classification system.

Introduced on 22 June 2012, superannuation trustees must disclose a Standard Risk Measure for each investment option offered in a superannuation product covered by the SPDS regime, using a seven level classification system (from 1 to 7 – where 1 is ‘very low risk’ of negative returns, and 7 is ‘very high risk’). The Standard Risk Measure is designed to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period.

ASFA expects that trustees using the Standard Risk Measure system will be able to demonstrate that they have a proper basis for the conclusions reached; that they can justify the classification decision (e.g. through modelling); and that they have access to robust data, systems and processes that substantiate the decisions to categorise the investment strategies as they have.
“This is where J.P. Morgan comes in,” says David Braga, Investor Services Product head for Australia & New Zealand. “The OPAL tool gives superannuation trustees a powerful, web-based tool that enables them to analyse their underlying data and quickly assess their level of investment risk, as part of their wider responsibility in considering and disclosing investment and other risks for each investment strategy to comply with the new FSC/ASFA guidelines.”

“The Standard Risk Measure can be simply derived from the Portfolio Construction Tool (PCT) module within OPAL. When we have demonstrated this capability within OPAL to clients, their feedback has been that it is both user-friendly and intuitive,” Braga said.

“Beyond its application to the Standard Risk Measure, OPAL has been designed to support institutional investors with their decision-making around investment manager selection and asset allocation. OPAL can help institutional clients make more informed decisions and optimise their portfolios through the creation of innovative and forward looking solutions that address both current and future needs,” he added.

Key features of OPAL include:

• Factor Attribution: breaks down the sources of an investment manager’s return into various risk factors to determine a manager’s true alpha or value add.
• Peer Grouping: ranks investment managers relative to peer group across multiple time periods according to selected criteria.
• Report Card Ranking: ranks all investment managers within a peer group on a risk/return basis to determine best performers according to selected criteria.
• Consistency Analysis: measures various risk/return statistics to help investors identify managers who consistently generate alpha over extended periods of time. 

OPAL is a market leading web-based portfolio analytics tool developed by the J.P. Morgan Investment Analytics & Consulting team, which currently services over 300 clients globally with approximately 10,000 institutional portfolios that represent US$2 trillion in assets.

About J.P. Morgan Worldwide Securities Services
J.P. Morgan Worldwide Securities Services (WSS) is a premier securities servicing and fund administration provider that helps institutional investors, alternative asset managers, broker dealers and equity issuers optimize efficiency, mitigate risk and enhance revenue. A business of JP Morgan Chase & Co., WSS leverages the firm’s global scale, leading technology and deep industry expertise to service investments around the world.  It has $17.7 trillion in assets under custody and $7.1 trillion in assets under administration. 

About JPMorgan Chase & Co.
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2.3 trillion and operations in more than 60 countries. The firm is a leader in investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world’s most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.