UK - Hermes confirmed it is reviewing options for its index-tracking division, but refuted claims the division was cross-subsidising its active management business.
Hermes Pensions Management said it was conducting “a strategic review” of its Index Tracking capability within Hermes Assured Limited (HAL) and its segregated client portfolios in this area.
“Hermes is exploring a number of options which will allow it to continue to increase the competitive position of its index-tracking offering… including actively investing in and growing its passive business and/or seeking to partner with another leading passive provider,” the firm said, and added a decision would be reached around July.
Media reports today claimed that move could expose the limited size of its active management business and added Hermes had enjoyed a degree of cross-subsidy by the index funds.
Reacting to that news, a spokesperson told Global Pensions: “We disagree with the suggestion the tracking side in any way subsidises the other side. That is simply not the case.”
Regardless of the review’s outcome, Hermes said it would continue to grow its active investment management activities and its corporate governance stewardship programme.
“Hermes’ position as investment adviser to all BTPS’s assets, with responsibility for overall asset allocation, will also remain unchanged,” Hermes said.
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