UK - Consultants have been accused of ignoring alternative asset classes and muscling niche fund managers out of the market.
Alternative fund managers said that consultants were stonewalling their attempts to reach pension funds and so preventing them from entering the pensions market.
They claim the lack of research capabilities means consultants are over-concentrating on mainstream equity and bond portfolios at a time when some alternative asset classes would reduce risk and increase returns for funds.
One fund manager said: “Researching in new asset classes would require consultants to build scale and invest in new people – something they are evidently unwilling to do.
“This reluctance will certainly fail the pension schemes that could benefit from additional diversification.”
But consultants rejected this criticism. They claimed some alternative asset classes were peripheral and not very important for pension scheme clients.
Hewitt Bacon & Woodrow partner and chairman of its investment policy group Kerrin Rosenberg said: “We have clients experiencing some very large, big picture issues about equities versus bonds and how much equity exposure they should have and how should the bond portfolio be managed.
“We are focusing our research effort on the things that are of most significance.
“There are other issues out there of peripheral interest that are obviously going to fall lower down in our list of priorities.”
But fund managers believe that this is exactly the time when pension funds should be revising their strategy and broadening their diversification in terms of risk.
Director of Intermediate Capital Group – a long established specialist sub-investment grade fund manager – Andrew Phillips said: “It is all very well to say it is peripheral but private equity was peripheral at one point.
“The one reason that it is peripheral is because it is not getting any attention.”
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