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A Bloomberg Professional Services Offering

Case study: pension funds

Modeling the futurePORT provides more precision for controlling the risk and return of multi-market portfolios.

Case study: pension funds Modeling the future

Consistency & transparency in risk management

Without the necessary tools, managing a financial portfolio and seeking the best investment opportunities can be a labor-intensive and time-consuming mission. But not for Bloomberg Terminal® users. With PORT <GO>, an integral part of the system’s functionalities, it is possible to create and refine investment strategies by considering asset characteristics, historical performance and potential future risk, thus allowing you to manage and monitor portfolios with concise and relevant data in real time.

Forluz

Assets under management

• R$16.04 billion

Participants

• 6,739 contributing• 15,784 receiving

Total: 22,523

Sponsors

• Cemig• Gasmig• Cemig Telecom• Cemig Saúde• Sá Carvalho• Rosal• Taesa• Indi• Efficientia

Fundação Real Grandeza

Assets under management

• R$15.7 billion

Sponsors

• Furnas• Eletronuclear• Fundação Real Grandeza

Health

• 22,815 contributing• 10,306 receiving• 13,412 aggregate

Total: 46,533

Pension

• 3,988 contributing• 8,807 receiving

Total: 12,795

The complete set of PORT’s custom analyses, combined with the time savings generated by the solution, offers investment fund managers better returns in their portfolios, plus gains in productivity, mobility and consistency. For this reason, PORT has been adopted by various segments of the economy, such as closed pension fund foundations, that manage a large amount of resources in broad and complex portfolios.

Fundação Forluminas de Seguridade Social (Forluz) and Fundação Real Grandeza, for example, found the help they needed to optimize their operations in the PORT solution of the Bloomberg Terminal.

“With Bloomberg, the processes have greater consistency, greater uniformity and greater precision,” summarizes Antônio Carlos Bastos d’Almeida, Risk Advisory Manager at Forluz.

Antonio Machado, Investment Operations Manager at Fundação Real Grandeza, added, “by integrating the systems, PORT has brought great gains in operational speed and productivity.”

Bloomberg’s PORT <GO> enables institutions to have a detailed view of their fixed income and equity portfolios and to have derivatives listed in local or international market exchange, providing exchanges, thus the necessary tools to monitor and manage them.

Facilitating the definition and improving the precision of the portfolio’s risk and return, the platform helps Bloomberg’s clients make more informed decisions.

“ With Bloomberg, the processes have greater consistency, greater uniformity and greater precision.”

— Antônio Carlos Bastos d’Almeida, Risk Advisory Manager at Forluz

Case study: pension funds Modeling the future

Forluz

Symbol of corporate governance & uniformity

To manage R$16 billion in financial assets and to be recognized as a symbol of good corporate governance and consistency in risk management are sources of pride for Forluz, a pension fund of the Centrais Elétricas de Minas Gerais (Cemig). In 2016, after nine months of consulting and auditing, the largest pension fund of the State of Minas Gerais and eighth largest in Brazil was granted the ISO 31000 international certification in risk management. According to Forluz, using PORT <GO> in the Bloomberg Terminal was instrumental to this achievement.

The practicality of PORT in aggregating large amounts of information and keeping the whole process documented has contributed to Forluz’s recognition in risk management.

“If I didn’t have a good tool to show how we do research, verification and other risk limits, and the auditor thought the process was inconsistent, it would be very difficult to have this certification,” says d’Almeida.

Managing and minimizing risks is fundamental to pension management, as is operational transparency.

“We can’t fail with this type of commitment with the participant. It’s a very strong fiduciary relationship. Especially because of our own regulatory body, we must follow all these risks carefully,” emphasizes d’Almeida.

Strategic decisions with autonomy

Anchored in the commitment to facilitate a healthy financial future for its 22,000 participants, Forluz used economic consulting services to help in making its purchasing decisions.

“We used to receive a huge amount of information every month, but we didn’t have the freedom to question it because we didn’t have the tools to perform validation,” d’Almeida recalls. That’s when a professional from another entity suggested using Bloomberg’s portfolio management tools. “That sparked interest because it was what we wanted: a tool that we could set up the way we wanted.”

For a time, Forluz kept using the consulting services and PORT’s data in parallel. The gradual comparison of external professionals’ reports the data collected in the Bloomberg Terminal provided Forluz with the necessary information to make the decision to internalize the analysis processes, recalls d’Almeida.

“We saw that there was consistency between the positions presented and we could cancel the [consultant] contract and start doing everything through Bloomberg.”

In addition to the possibility of working with various indicators without depending on third parties for analysis, the sharing of information facilitated the integration between teams, according to d’Almeida.

“The [Bloomberg] tool ends up being useful not only to the Foundation’s risk area, but also in the areas of portfolio management, variable and fixed income management, etc.”

The complexity of Forluz’s work, which manages three complementary pension plans, naturally meant that the number of portfolios entered into the system increased over time.

“We started to create many portfolios to meet the needs for information breakdown”, explains d’Almeida. “We must provide information by plan, by profile, by sponsor. This started to generate too many breakdowns and our portfolios became very complex.”

The solution came in the form of a premium service, the PORT+ extended portfolio, which raises the limit from 70 to 150 investment strategies managed.

Customer support secures a seamless transition

The transition process for the PORT function was fully integrated into the day-to-day work of the Forluz team. It was no longer necessary to use the consulting services as Forluz could count on the broad support of Bloomberg’s training team, both for support in using the tool and in loading XML files.

Bloomberg’s model of customer support offers in-person visits and a channel of communication via chat or phone, 24 hours a day, in any language.

“The availability of the Bloomberg team to provide information, training and clarify questions is great. All of our expectations were fully met. The service is very good in this aspect,” says Rodrigo Neves Francia Maia, Analyst at Forluz.

Automation facilitates data loading

Maia highlights the ease in managing the massive amounts of information. “We receive the XML files automatically from the funds. After the funds are mapped in PORT, we can perform a bulk upload of all the XMLs of a given date into PORT,” he explains.

“We can have an updated position of the fund invested, with all the assets and all the positions held by the fund. It’s an easy process. It has a functionality that creates the ability to grab all the settings and mappings from previous funds and replicate them in new funds. This greatly facilitates the work of loading XML files.”

By using PORT and the Bloomberg Terminal, Forluz now has a management that gives more security to professionals facing any market challenge — all with more speed and economy of resources.

“We traded a service that was costly for a platform that was already at our disposal with shared costs. We had financial gain, in terms of time and consistency,” highlights d’Almeida. “Before, I waited for a third party to forward me the information. Today, it’s up to us.”

Case study: pension funds Modeling the future

Compliance & operational speed with principles

Compliance and operational speed are more than slogans at the Fundação Real Grandeza (FRG). In reality, they are the guiding values in decision-making of the complementary pension entity that manages R$15 billion for active and assisted participants. Positioned among the top 10 in the latest ranking of the Associação Brasileira das Entidades Fechadas de Previdência Complementar (Abrapp), the pension fund of Furnas and Eletronuclear has a solid commitment to its 12,000 beneficiaries.

Between 2005 and 2006, FRG leveraged the market expertise acquired since its founding in 1971 to promote “a real turn around” in the investment area, according to Antonio Machado, Investment Operations Manager.

“The goal was to adopt the best practices available in the market in terms of investment management, especially risk management. We wanted to apply state-of-the-art investment management available in Brazil, the best for our participants.”

And it was in a context of transformation that the Fundação Real Grandeza and Bloomberg began a solid and lasting relationship.

“Traceability is a very important word for us. One of the things that we’ve achieved in this process with Bloomberg was to monitor the whole process of negotiating a decision, from beginning to end, for audit purposes,” recalls Machado.

In 2007, before legislation was passed requiring the use of an electronic platform for securities and bonds trading, FRG already enjoyed increased operational speed with the Bloomberg system, which allowed the integration of custodial systems.

Value generation for pension funds

The complete set for decision-making available on the Terminal is what captivated Bloomberg users at Real Grandeza.

“In addition to operational speed, system integration and compliance, several of the analytics tools offered by Bloomberg added value over time,” praises Machado.

Fundação Real Grandeza also uses PORT, the online investment portfolio management tool offered on the Bloomberg Terminal. “We can see the portfolio’s performance with respect to all indices, whether or not the decisions made were right, performance assessment, tracking error and stress scenarios, which help us greatly”, emphasizes Mario Tanus, investment analyst at FRG.

In addition to the overview of investment portfolios, time savings is another great benefit of the tool.

“By integrating the systems, PORT brought giant gains in operational speed and productivity. Before, I used to work over the phone with one broker at a time. Now, it’s much easier to operate with three, four, five brokers at the same time. We managed to diversify in a much more productive way,” says Machado.

“When we used to buy and sell government and private bonds, we often used spreadsheets to track the paper flows. Today, Bloomberg gives us all that. And we can compare it to other bonds. The system gives the duration and monitoring, along with the interest curve, domestically and internationally. For us, it is the essential tool”, says André Figueiredo, Investment Operations Manager.

In PORT, Real Grandeza found the ideal tool for tracking the historical performance of its portfolios and for giving more security to future decision-making.

Real Grandeza

Case study: pension funds Modeling the future

Governance & sustainability

With a system that facilitates and promotes the institutionalization of processes, Bloomberg helped FRG to make its aspirations tangible. Socio-environmental guides and investment policies that solidify the firm’s values were created, making the processes of negotiation more ethical. “We’ve developed a model, along with the investment policy called Diretrizes de Processos de Investimentos. It shows what we want from the market and how we apply each of the segments,” says Machado.

The understanding that environmental responsibility is not in conflict with the search for results has put FRG at the forefront of closed complementary pension entities — both in its own standards and in requiring that companies involved in its trades be structured to take into account socio-environmental issues.

“We believe that when a company controls its own carbon footprint, all of its processes tend to be more efficient. If a company is concerned with environmental preservation to meet the needs of the current generation without affecting the future generation, you have a better performance in terms of costs and productivity, and you are reducing risks,” explains Machado.

With PORT and other Bloomberg tools assisting in decision-making and also with structural issues, such as socio-environmental concerns, the team at Fundação Real Grandeza gained agility and expanded its management and decision-making capacity — everything a pension fund needs to ensure a better future for its beneficiaries.

“ By integrating the systems, PORT has brought giant gains in operational speed and productivity.”

— Antonio Machado, Investment Operations Manager at Fundação Real Grandeza

Case study: pension funds Modeling the future

About PORTAvailable on the Bloomberg Terminal, PORT places the most powerful global tools for risk analysis and multi-market portfolios at your fingertips, so that you can successfully implement your strategies.

Fully integrated into the Bloomberg Terminal and without additional cost, PORT provides a complete perspective of your portfolio — past, present and future — optimizing your investment management flow and facilitating faster, more accurate decision-making.

Bloomberg’s exclusive risk factor analysis models also help to measure, analyze and predict portfolio risk.

PORT advantages

• Enhances portfolio manager’s daily workflow.

• Assists in strategic portfolio decision-making.

• Ensures data visibility and impartiality.

• Uses consistent risk and return calculation methodologies.

Case study: pension funds Modeling the future

About the Bloomberg Terminal.Since 1981, business and financial professionals have depended on the Bloomberg Terminal® for the real-time data, news and analytics they need to make the decisions that matter. The Terminal provides information on every asset class — from fixed income to equities, foreign exchange to commodities, derivatives to mortgages — all seamlessly integrated with on-demand multimedia content, extensive electronic-trading capabilities and a superior communications network.

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