Financial institution investment portfolios are a critical part of their liquidity. We have seen institutions not diversify portfolios trying to maximize returns. We put together and manage portfolios that diversify risks, interest rate and credit, to maximize returns and minimize risks. We have witnessed the negative impact of excessive risks in investments such as municipal bonds. It was not that long ago when municipalities had their credit downgraded and the required rates of return increased putting these bonds at a significant loss position, which can impact equity and income. We can illustrate and help manage all these risks.
Our staff has managed investments in all economic climates. We can assist in managing risks and returns, getting the right mix. We have even lowered risks while increasing yields.
Documenting investment objectives , approvals and decisions can be quite onerous. We can set up a process that will assist in total compliance. The more risk, the more documentation required to satisfy regulatory requirements. Many financial institutions reach for yeild, but don’t document very effective and reasonable assumptions. There’s nothing wrong with the investment decisions, but the rational thought processes and supporting documentation is also needed.
There must be a rational investment plan and policy. If economic assumptions do not come to fruition, the investment plan must show the willingness and knowledge to change strategies and alter the portfolio composition.
We can help.