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Portfolio management

Driven by the changing economic landscape and market volatility, risk has grown incredibly complex. Financial institutions face the need to manage this complexity holistically while remaining competitive.

Moody’s combines portfolio analytics and decision-enabling tools to support banks, insurers, asset owners, and asset managers in identifying, measuring, and managing risks and opportunities.

With over a century of expertise coupled with the benefits of scalable and modular technology, Moody’s helps financial institutions anticipate, adapt, and thrive in the new era of exponential risk.

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Testimonial

"We chose this cloud-based solution in a bid to achieve higher efficiency and we are expecting shorter processing times as a result. Other considerations included the ability to model credit risk limits within the tool, which enhances confidence, and the improved visuals that provide peace of mind by enabling better analysis of outputs."

— Head of Quantitative Analytics and Liquidity Risk Management
Momentum Metropolitan

Credit portfolio management

01 Risk/return measurement

Risk/return measurement

Our solution produces actionable outputs that help enhance portfolio risk-adjusted performance, ensuring banks build resilient and profitable portfolios.

  • Calculate risk measures such as internal, economic, regulatory capital

  • Evaluate shifts in credit quality

  • Understand correlations and concentrations
     

  • Conduct instrument-level analysis

  • Support pricing, hedging, selling, and structuring

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02 Portfolio analytics

Portfolio analytics

Moody's portfolio analytics solutions deliver a flexible framework that provides extensive coverage of a wide range of asset classes to provide transparency into a portfolio’s exposure, risk, and performance. These tools allow investors to perform scenario analysis, stress testing, sustainability analysis, and portfolio risk and attribution analysis.

Our scenario analysis tools, built using comprehensive models and industry expertise, help enable firms to:

  • Stress test portfolio resiliency and perform what-if analyses across all asset classes

  • Use different inputs and model assumptions to analyze the market risk of your portfolio through time allowing you to take proactive mitigation decisions

  • Easily articulate portfolio management strategies to stakeholders with robust reporting

  • Perform analysis on sustainability, physical and transition risks across your portfolios helping you test the impact on asset values

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03 Concentration risk

Concentration risk

For institutions looking to make informed decisions and strengthen their portfolio management, understanding the dynamics of name or segment concentration is crucial. This analytical approach goes beyond meeting regulatory requirements; it is a strategic tool for managing credit and aligning portfolio strategies with the institution's risk appetite. The global correlation model framework developed by Moody's plays a pivotal role in this context, offering a detailed analysis of correlations across names and segments to reveal the impact of concentration on a credit portfolio's health.

Through our solution, institutions can access these insights to understand concentration risk drivers, enabling them to navigate the complexities of portfolio management with greater confidence. 

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04 Physical, transition and emerging risks

Physical, transition and emerging risks

This strategic workflow solution helps the risk function to analyze and strategically act on physical and transition risks and opportunities within the credit portfolio.

This integrated workflow offers tailored analytics to help banks and insurers quantify the impact of physical and transition risks on capital, provisions, and earnings.

With extensive coverage of asset classes and physical and transition risks under multiple scenarios, our solution supports portfolio planning decisions, rigorous scenario analysis and stress testing and facilitates alignment with international regulations.

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05 Portfolio optimization

Portfolio optimization

Use advanced business applications to steer your portfolio towards optimal performance measures with confidence and clarity.

  • Scenario analysis and stress testing

  • Risk-based limit setting

  • What-if analysis

  • Portfolio optimization techniques

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Strategic asset allocation

01 Buy-side

Buy-side

Strategic asset allocation decisions allow asset owners to manage risk, optimize returns, align investments with long-term goals, fulfill fiduciary responsibilities, and adapt to evolving trends. Supported by consultants and managers, asset owners can create detailed investment strategies, considering trends, fiduciary duties, and operational efficiency.

Our solution provides valuable support to those involved in strategic asset allocation by helping to improve efficiency, productivity, governance, and results, which in turn, helps them successfully deliver on plan objectives. Moreover, our solutions support the creation of diverse and risk-efficient portfolios by helping to meticulously analyze various asset allocation decisions and strategies against specific risk targets and objectives within a flexible modeling framework.

Benefit from a simple-to-use solution that delivers valuable insights and drives more meaningful interactive relationships between pension plan trustees, sponsors, actuaries, consultants, and investment managers.

Some key features include:

Flexible Modeling Framework

  • Analyze asset allocation decisions and investment strategies
     

  • Evaluate risk targets and objectives

  • Utilize diverse asset classes within the framework

Strategic Asset Allocation requirements

  • Help ensure assets meet liabilities within defined risk tolerance
     

  • Help maximize returns from specific asset portfolios

Real-World Scenario Modeling

  • Supports the production of plausible distributions and likely returns
     

  • Covers a wide array of risk factors and asset classes
     

  • Incorporates extensive research on global asset behavior

  • This approach provides a comprehensive and adaptable strategy tailored to individual needs, fostering financial stability and growth

02 Insurance

Insurance

Given their complexity, assessing and estimating insurance liabilities requires a scenario-based approach involving modeling that combines potential economic risks with detailed ALM models specific to the insurance sector.

Moody’s brings these requirements together in a robust framework which includes:

  • Award-winning scenario modeling to project assets and liabilities over a range of planning horizons

  • Efficient approaches for calculating and projecting insurance liabilities and capital

  • Calibration to align modeling framework to economic views and capital market assumptions
     

  • Research and technical insight on capital management and portfolio optimization

  • Governance framework for developing and managing assumptions and views

Public and private company data

Asset managers and investment professionals leverage our robust data offerings, including public and private entity databases with detailed information on over 462 million entities and 1.8 billion ownership links.

Our data when combined with our credit models and analytics, as well as our AI-enabled news and sentiment analysis capabilities, give buy-side participants a more comprehensive look at adverse credit signals in their portfolios.

We seamlessly integrate our data into proprietary trading and portfolio management applications, providing a smooth and efficient workflow. Beyond traditional financial metrics, our extensive data resources offer a comprehensive view of risk across the entire organization.

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News and views

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Moody's
Are private market investments helping insurers’ portfolios?

Private market assets have become a bigger part of an insurers broad asset allocation mix. Quantifying the risk associated with alternative investments can pose many challenges. This article provides a different perspective on how to simplify the process and assess the impact of a wide range of alternatives on an insurers’ risk and return profile.

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article
Moody's
How small and medium-sized banks can enhance deposits modelling frameworks

Recent events have called into question the reliability of deposits as a primary source of funding for small and medium-sized banks. Stickiness of deposits that generations of bankers had counted on suddenly seem ephemeral.

  • Portfolio management
  • Banking
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article
Moody's
UK balance sheets: The link between interest rates and deposits

A sharp rate cycle was initiated in 2021 by central banks in a number of major economies which continued throughout 2022. In the case of the UK, this is the fastest that rates have risen in over three decades. As policy rates have fed through to deposits, banks’ balance sheets have been shifting.

  • Portfolio management
  • Banking
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article
Moody's
Private debt: How much is too much in a credit portfolio?

This case study analyzes the credit risk of a sample portfolio of corporate bonds and private debt holdings. The sample portfolio was intended to mimic a largely safe lender or asset manager that has recently expanded into private debt.

  • Portfolio management
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