Products April 26, 2011

Dow Jones Finds Partner for Index Series

Index provider Dow Jones Indexes announced the development of a new index family.
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Dow Jones has agreed to develop and co-brand an index family with risk management research consulting firm LSP Partners LLC, which will utilize a proprietary strategy created by LSP Partners founder and CEO, Ralph Vince. 

The companies created the Leverage Space Portfolio (LSP) strategy, which “seeks to maximize the probability of equity portfolio profitability by employing a risk-control process focused on capital preservation and drawdown management. Compared to a traditional buy-and-hold portfolio, an LSP-based portfolio aims for more consistent returns with lower risk.”

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The indexes, scheduled to be launched in the second half of 2011, can serve as the basis of both passive and active investment funds, including exchange-traded funds, mutual funds, and institutional accounts around the world, according to the firms. 

“We believe the marketplace will welcome our new family of indexes that applies this unique portfolio risk-management theory,” said Michael A. Petronella, President, Dow Jones Indexes. "These innovative techniques aspire to change the paradigm of the professional investment management process while providing Dow Jones Indexes with an opportunity to expand our roster of risk-based indexes.”

According to the announcement, Dow Jones Indexes has fully automated all elements of the LSP strategy, allowing for universal, systematic, and transparent application of a rules-based strategy to equity portfolios of any size or composition.

“The association with Dow Jones Indexes is, to us, a commercial validation on the highest order of our portfolio management ideas,” LSP Partners’ Vince said. “We're extremely proud to collaborate with the world’s foremost index provider.” 

Deals & People April 26, 2011

Riverside Plucks Plake from NISA

Riverside Risk Advisors, a boutique derivatives advisory firm, has hired Steven Plake.
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Plake is expected to broaden Riverside’s relationship with corporate and public pension plans, which the firm notes are increasingly using derivatives for financial planning purposes. 

“We are reaching out to pension funds, their consultants and investment managers in a derivatives advisory capacity,” commented Joyce Frost, a partner at Riverside Risk Advisors. “Steve will lead Riverside’s pension effort helping plans in evaluating transactions and assisting in the construction and execution of derivatives strategies, complying with fiduciary duties and working through Dodd-Frank transition issues,” she added. 

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Plake has five years of experience working with corporate and public pension and retirement plans developing derivative programs and structured products.  He provided deal management, documentation negotiation and structuring support on a range of investment strategies, including synthetic duration extension, portable alpha and stable value, according to the company.  In addition, Plake has routinely assisted pension and retirement plan sponsors in understanding and complying with fiduciary duties in the investment management context, according to the press release.

Prior to joining Riverside, Plake was at NISA Investment Advisors, a fixed income asset management firm specializing in managing pension plan assets. While at NISA, he played what was described as “an integral role assisting in the development, implementation and execution of hedging strategies for pension plans,” also serving as a member of the firm’s risk management and counterparty credit review committees.Plake holds a J.D. from Washington University in St. Louis and a B.S. from Cornell University.

Riverside Risk Advisors notes that pension plans use derivatives as a tool to reduce general interest rate risk in planning for retired employees’ benefits and to enhance returns on assets. Historically, derivative programs have been implemented in consultation between the pension plan’s consultant and underlying investment managers.

“As derivatives become both more complex and important for pension funds, trustees need independent expert advisers who have the depth of experience to truly help them assess the appropriateness and pricing of derivatives,” commented Edward Krawitt, Trustee, EMI Group Pension Fund.  

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