US - Pension funds are reviewing policies governing securities lending pools and short-term investment funds, a survey by Greenwich Associates has revealed.
Dev Clifford, consultant, Greenwich Associates, said: "The credit crisis served as a difficult reminder that there are no free lunches in investing.
"When markets were historically strong it became easy for parties on both sides to accept the status quo - and the incremental investment returns.
"Now that the bubble has burst, institutions are returning to the practical steps that should be part of basic due diligence, regardless of market conditions."
The study found institutions were considering or already implementing changes in the internal policies related to their securities lending programs or short term investment programmes.
Greenwich said the actions taken to date by the institutions were evaluating the costs and benefits of the programmes; stepping up their oversight of fund investment practices; increasing the frequency of communications with managers and more carefully reviewing regular statements.
Institutions were also tightening investment guidelines by restricting investment in structured or securitised product or limiting investment to government securities.
Over 80% of the institutions that experienced unexpected risks or credit exposures in their short term investment funds said they were satisfied with the response of their master trust or custodian bank.
Nevertheless, the proportion saying they were not pleased with the response was 17% - a share that jumped to 35% among institutions with more than US$5bn in assets.
In particular, dissatisfied institutions said actions or inaction on the part of their master trust or custodian bank forced them to realise losses.
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