EUROPE - European pension funds are becoming more receptive to international specialists, often not at the behest of their Anglo-Saxon consultants, according to a new report by Morgan Stanley.
A new report by Morgan Stanley on the European pension fund management industry found that in Holland, 36% of Dutch pension fund assets were held by international players in 2004, up from 33% in 2003, while in Germany Morgan Stanley estimates that one-third of the existing mandates have been reallocated to foreign houses since deregulation 15 months ago.
Huw van Steenis (pictured), an equity analyst at Morgan Stanley said: “Across continental Europe, we are seeing a growing use of international specialists. Contrary to the thinking of many, this is often not at the behest of Anglo-Saxon consultants, but rather from pension funds themselves making their own decisions.
“In fact, some asset managers prefer to mine the Dutch, Swedish, Swiss and German markets due to their size, sophistication and lack of intermediation by consultants.”
In the Dutch market, Morgan Stanley found that the urgent search for alpha has seen a surge in enhanced index at the expense of active and pure passive, benefiting quantitative specialists such as Barclays Global Investors (BGI), which is now the largest pension fund manager in the Netherlands.
This quest for alpha combined with changes in regulations were making Dutch pension funds switch to “best-in-class” Anglo-Saxon asset managers benefiting BGI, Northern Trust, State Street, Merrill Lynch, Vanguard and Goldman Sachs Asset Management (GSAM).
The report found that there has been a growth in hedging and overlay strategies making the Netherlands the most buoyant market in Europe for TAA strategies.
Growing costs from additional fiduciary regulation is encouraging many small firms to consider outsourcing their plans. Beneficiaries of this development should include Mn Services and GSAM, which has a fiduciary arm.
The report found that new FTK rules which will come into force from 2006 will promote additional changes to asset allocation from 2005, including evaluation of inflation-linked bonds, interest rate hedging and a range of derivative based strategies and an extension of the maturity profile of bonds from five years to closer to the mid-high teens at which liabilities lie.
Some of the UK's biggest pension schemes will be forced to report on climate risk in line with recommendations from the Taskforce for Climate-related Financial Disclosures (TCFD).
TPT Retirement Solutions has launched a pension scheme for the education sector which offers schools both defined contribution (DC) and defined benefit (DB) pension provision.
The People's Pension has revealed plans to overhaul its charging structure, cutting fees and returning profits to members with an aim to help people save more money for retirement.
Data consultancy ITM has appointed Akash Rooprai as head of client management to lead its de-risking business.