Ivy Asset Management has made a significant investment in risk management and quantitative research. In an investment arena where there are short data sets, non-linear distributions and multiple asset classes with esoteric combinations, Ivy’s Risk Management & Quantitative Research Group has successfully translated the disciplines found in traditional asset management and has expanded them to introduce new standards in the hedge fund of funds industry.

While the risk management team collaborates extensively with the research and portfolio management teams to make investment decisions, the group reports independently of these teams. This is done in an effort to keep the views of the risk management team clear and unbiased, aiming to preserve the integrity of Ivy’s risk management process.

Investment Process Contributions
The Risk Management & Quantitative Research Group applies the latest academic theories to the creative development of risk analytics in bringing greater objectivity to each phase of the investment process. They provide manager risk assessments used for manager approvals; offer inputs to the Manager Ranking System; and assist in determining Risk Profile rankings to provide an objective benchmark in evaluating and managing risk.

The risk management team has also developed proprietary models and reports to conduct quantitative risk analysis at the portfolio level. This includes stress testing methodologies, optimization methods, monte carlo simulation and refinement of data to take into account short-term data streams needed for portfolio construction, monitoring and rebalancing. Ivy performs these analyzes to minimize dependence on the value-at-risk (VAR) methods that permeate the risk management industry and tend to fail during crisis periods.

Independent Risk Oversight
The Risk Management & Quantitative Research Group, in reporting separately from the Global Manager Research and Portfolio Management Groups, maintains an independent perspective on risk assessment and management. The head of the group also chairs the firm’s Investment Risk Management Committee playing the central role in evaluating risk at the individual manager, portfolio and firm-wide levels. Findings are reported directly to senior management for review and action.

Ivy is an elected member of the Institute for Quantitative Research in Finance®, also referred to as "The Q-Group."® A U.S. based organization, the Institute was founded in 1966 and is regarded as one of the most prestigious organizations in the field of finance. The “Q-Group" aims to help the investment community research, create, and implement structured solutions to financial and investment problems. It also strives to contribute to the development and understanding of new quantitative techniques to improve the operation of the global financial marketplace. Ivy’s membership in “The Q-Group” provides access to knowledge sharing among an elite group of practitioners.

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