Background to the client’s requirements

The client wanted to set up a professional fund management infrastructure, along with risk and performance monitoring of investments, aligned to its policy requirements. It also wanted to strengthen the in-house investment monitoring team.  

Solution provided 

The client appointed CRISIL as a consultant through a tender process. CRISIL drafted a plan of action for the selection and onboarding of portfolio managers and regular monitoring of investments. 

CRISIL leveraged its deep understanding of investment management functions across segments such as mutual funds, insurance, retirement funds, along with its experience of evaluating mutual funds, unit-linked insurance plan (ULIP), retirement funds, corporate treasuries to understand the nuances related to making investment decisions and performance evaluation.  The outcomes of CRISIL’s actions are as follows: 

• Drafting a request for proposal (RFP) with the appropriate process and parameters for the selection of portfolio managers, along with their roles and responsibilities
• Assisting the client in holding pre-bid conferences, evaluation of the bids, and onboarding the selected portfolio managers
• Assisting the client to design MIS formats for regular reporting by the selected portfolio managers
• Designing and developing a performance evaluation framework, including the a customised benchmark index to evaluate the performance of the portfolio managers, which is unique to the client given the buy and hold strategy of investments
• Reviewing and designing standard operating procedures (SOPs) related to the investment process followed by the client

The outcome was the selection of portfolio managers from investment managers who participated in the RFP process, formulation of a framework for performance evaluation and monitoring of investments, and the creation of a customised benchmark index to assess outperformance or underperformance of the selected portfolio managers. CRISIL also provided inputs for the designing process and parameters for the selection of a custodian of securities to ensure a client’s investment remained in safe custody. Further, CRISIL helped the client design the process and parameters for the selection of asset management companies (AMCs) to invest in equity exchange-traded funds (ETFs)

Client impact 

The client has moved to management of investments by professional portfolio managers on a discretionary basis.

The client can identified the challenges it was facing in fund management and amended its investment guidelines/internal limits based on discussions during the performance review of portfolio managers 

The client can evaluate various asset classes and investment options to enable investments based on discussions and knowledge sessions conducted by CRISIL with the client/concerned ministry officials. 

It has strengthened the monitoring and investment processes through defined SOPs.