By John Wilkinson
Melbourne-based fund manager OFM Investment Group has struck a deal with Credit Management Australia (CMA) to become the first client of the latter’s risk management system.
The newly-developed software analyses the risk of loss and defaults on every loan in a portfolio and then ranks each one for credit risk.
CMA general manager Jennifer Gannon says the software will enable a mortgage manager to objectively quantify credit risk and levels of transparency in the portfolio. This is an area which has come under fire by managed funds research houses, and will benefit product researchers and investors by supplying more details on each portfolio.
Gannon says late last year, Assirt Research released an industry review paper which found most mortgage managers are not as sophisticated in their risk management process and infrastructure as desired, given the substantial inflows into the sector. As a consequence, it advised investors to focus on mortgage funds that have strong risk management practices.
OFM chief executive Rick Curtis says the decision to acquire the software was based on the fund manager’s own risk management requirements.
“It will also enable us to address the ongoing concerns expressed by a number of research houses about the level of objectivity and transparency surrounding the make-up of mortgage portfolios,” he says.
It is understood another financial organisation with mortgage funds has also tested the software, although there has been no sale to date.
