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.
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