Performance and risk analysis is conducted and reported as part of the monitoring process. Performance and risk analysis and reporting is undertaken for the portfolio as a whole and also by asset classes, direct investments and external managers. Performance and risk is reported and aggregated by an independent performance measurer.
The investing institution’s assets are valued in accordance with recognized international or national accounting standards where appropriate, as well as industry best practice. Valuations are performed, or at least verified, independently.
The board and/or management seek professional safekeeping of the investment assets of the social security institution, whether internally or externally managed.
Investment proposals generated internally or externally are subject to appropriate due diligence.
Active, passive or hybrid mandates are implemented to achieve the identified investment objective considering the governance budget, investment beliefs and investment efficiency.
The portfolio is constructed with appropriate efficiency and diversification.
The investment philosophy and process is framed with reference to the investing institution’s skills, resources and processes.
Appropriate benchmarks and investment return targets are selected for use in analysing the performance and risk of the investing institution’s investments, whether managed internally or externally.
It may be possible to take advantage of asset market movements and changes in the value of the investing institution’s portfolio to implement a dynamic de-risking or re-risking strategy. The board, management and investment committee consider on a regular basis rebalancing the portfolio so that it is in line with the investing institution’s strategic asset allocation objectives.
As asset market values change over time, the investing institution is able to exploit variations in market valuations by investing differently than in the strategic asset allocation, while respecting the risk budget established in Guideline 7.
This process of dynamic investment (sometimes referred to as tactical investment) will be limited in time but the maintenance of such a position apart from the strategic asset allocation may subsist in the medium term.
