During the past decade, portfolio management units have been at the forefront of the scene in providing solutions to revive the stagnating debate about value creation and the risk/return trade-off. From a few desks in the basement where modellers struggled to price risk into capital decisions, portfolio management units (PMUs) have quickly progressed to the top floors of organisations, becoming the main reference point for ensuring capital optimisation by increasing velocity and reducing risk concentration.
This transition has been fuelled by changes in the regulatory framework (Basel II) and the sheer volume of sophisticated products that are being developed by capital markets desks. As a result, portfolio managers sit at the core of financial organisations and are no longer perceived as experimental or advisory functionaries.
