UK - F&C Asset Management lost £6.2bn in pension fund business in 2004, the firm's annual results have revealed.
F&C chief executive Howard Carter attributed the large institutional outflows, compared to institutional inflows of £2.7bn, to three factors – the industry wide trend of a move from balanced to specialist mandates and indexation; a switch from conventional assets to alternatives; and some instances of disappointing investment performance, notably in emerging market equities.
“Outflows were in part offset by new mandates, both in the UK and Continental Europe, particularly in a broad spectrum of specialist bond portfolios,” Carter said in his statement on the 2004 results.
“While the level of outflows for 2004 is high, it needs to be reviewed in the context of the profile of new business gains and the trend established by the enlarged organisation in recent years. Good progress has been made in implementing a strategy focussing on higher margin new business. Three such areas are investment trusts, private equity and alternatives, all of which grew their revenue and margins during the year.”
F&C has more than 1000 institutional clients and a major presence in Ireland, the Netherlands, Portugal and the UK. The firm expanded in October last year as a result of its merger with ISIS Asset Management.
Carter listed a number of trends in the UK pensions market that the firm will be looking to exploit in 2005.
“First is the move from balanced to specialist mandates; secondly, a shift towards fixed interest as an asset class with a focus on the link between a plan’s liability profile and its bond investments; thirdly, is a growing interest in high alpha equity mandates and alternative investments and; fourthly, is greater pressure on pension trustees to demonstrate they are engaging with companies on matters of governance and social responsibility,” he said.
Carter said F&C saw “significant potential” to roll out its Governance and Socially Responsible Investment (GSRI) product to its enlarged European institutional client base, particularly in the Netherlands.
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