State Street Corp. and J.P. Morgan & Co., partners since early 1997 in developing risk management tools, have made a low-cost one they co- developed this year available over the Internet.

The two banks follow Bankers Trust, which in June made its software for calculating risk-adjusted return on capital available over the Internet.

With the new State Street-Morgan service, VAR Calculator II, pension fund managers can download statistical information, updated monthly, about their portfolios. The previous version of the service, VAR Calculator, was not Internet based and typically provided information only quarterly and on paper.

"We decided that it would make sense for us to get together and come up with a(n Internet-based) product that made sense for plan sponsors," said Laurette Bryan, senior vice president at Boston-based State Street.

Many risk management systems, such as those built for securities traders, cost too much for most pension plans to use, Ms. Bryan said. Typically, pension funds make long-term investments in equities and need not know what their immediate portfolio risk is, she said.

The new service-charges for which were not disclosed-is designed mainly for State Street's custody clients, but those of other banks can also use it by plugging in their portfolio data or sending such information to State Street.

VAR Calculator II computes value at risk-the value a portfolio might lose during a specific period under various scenarios. It lets fund sponsors conduct portfolio stress tests by playing "what if" games.

The service is based on J.P. Morgan's popular Riskmetrics software, which employs the same methodology for use in daily trading environments.

State Street Analytics, the technology development unit of Boston-based State Street, adapted the Morgan program for Internet access. The unit offers risk management and benchmark services to 275 clients who manage portfolios valued at $600 billion.

Ethan Berman, a managing director of J.P. Morgan and head of its risk management products division, said VAR Calulator II is "testimony to the power of combining J.P. Morgan's leadership in risk management and VAR methodology with State Street's leadership in data accessibility and systems expertise."

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