Cutwater Asset Management and Calypso Technology, a provider of application software solutions, have partnered to build a new asset / liability management (ALM) portfolio-construction solution.

According to Cutwater Asset Management, the decision to develop a totally new platform design was made in response to the chaotic financial market conditions experienced in 2008 and 2009, especially those connected to funding risk and sharp volatility of returns. The result will be the creation of a strategic asset allocation and portfolio construction application designed to provide optimal trading and portfolio solutions while increasing risk awareness.

As part of this new platform, Calypso Technology will combine Cutwater’s capital risk framework, the Risk Analysis Manager (RAM), with Calypso’s optimization platform Galapagos. This solution will provide a multi-faceted risk budgeting, asset allocation and scenario management platform enabling Cutwater clients to explore a wide range of optimal investment strategies.

Integrating Cutwater’s risk framework into the Galapagos environment is expected to bring a new offering that will allow clients to model a wide range of investment objectives, funding specifications and constraints while considering forecasts over an extended time horizon.

Cliff Corso, CEO of Cutwater Asset Management, said: This new application is yet another innovation from Cutwater. Our goal for all of our clients is to minimize risk and volatility while meeting their investment objectives – we enter into this exciting partnership with the Calypso team as part of our ongoing dedication to performance and client service.

Charles Marston, chairman and CEO of Calypso, said: Through partnering with our customers, we continue to bring innovation to new levels. We are very privileged and excited to be able to work with Cutwater Asset Management to deliver a groundbreaking portfolio solutions tool based on the Galapagos technology platform. We believe this initiative will create significant value to both parties. It shows our commitment to the buy-side, where we see enormous growth potential.