Investment control or investment controlling is a monitoring function within the asset management, portfolio management or investment management. It is concerned with independently supervising and monitoring the quality of asset management accounts with the aim of ensuring performance and quality in order to provide the required benefit for the asset management client. Dependent on setup, investment controlling not only encompasses controlling activities but also can include areas from compliance to performance review. Investment controlling aspects can also be taken into consideration by asset management clients or investment advisers/consultants and consequently it is likely that these stakeholders also run certain investment controlling activities.
Efficient and appropriate management information on the quality of their discretionary managed portfolios is very important for an asset management company. Without decision-oriented information on the quality or performance of its products and/or asset managers for an asset management company it is very difficult to stand the increasing challenges of the asset management industry (increasing regulations, need for sophisticated risk management, etc.). Clients and consultants have similar needs where these often correspond to the asset manager ones some years ago. Investment controlling deals with such needs and helps to overcome the information gaps within asset management.
Investment controlling is an area of activity that is part of the overall controlling process within the asset management and is an important component of the recurring investment decision making process. From an asset management company point of view, in general investment controlling is defined as information management that gathers, processes, checks and distributes information necessary to meet the overall objectives of the asset management company. In this respect the investment controlling objective consists in configuring the infrastructure – particularly within the framework of the investment decision making process – in such a way that the processes (e.g. forecasting, decision making and implementation), the quality and the results (e.g. returns), the risks (e.g. of using derivatives) and the costs become more transparent and comprehensible. Considering the client perspective, in the following investment controlling is in general defined as independent monitoring of the performance of asset management products and/or accounts with the aim of ensuring that the client gets what was promised in the first place with respect to quality and performance.
As part of the overall investment decision making process investment controlling intents to visualise the contributions of the individual decisions of the investment process, especially with respect to return and risk, and to allocate the contributions to the responsible decision makers. The results and conclusions of the different investment controlling activities are important feedback and input into the investment process to enhance the quality or performance of the specific asset management product.
Form a general point of view investment controlling adds to the visibility, transparency and credibility of any asset management company. In detail investment controlling helps
Investment controlling is very manifold and encompasses a lot of different activities like:
On performance measurement and attribution:
No text books on investment controlling are available thus general literature on controlling, risk management and compliance may be considered as a substitute.