UK - Barclays Global Investors - which has begun offering ALM services to pension funds - took $100bn net new business in 2003, compared with $80bn in 2002.
Last year’s inflows broke down into: $33bn actively managed; $37bn indexed; $20bn from ETFs; and $8-9bn in cash strategies. Total assets under management comprise 69% indexed, 21% active and 10% managed cash.
Operating expenses excluding goodwill and restructuring costs increased to £473m from £439m last year. But Andrew Skirton (pictured), BGI’s co-global CEO, pointed out that operating profit excluding goodwill increased by 73% on 2002, revenue was up 23%, while expenses rose just 9% overall.
He added: “Expenses are very well contained and there is a big gap between the pace of growth of revenue and the pace of growth of expenses. Most of the growth in expenses covers revenue related activities - as we’ve grown custody costs, for example, go up and compensation costs go up because of the success of the business.”
Skirton said BGI continues to look to hire new talent. He added: “In terms of staffing levels, over the last couple of years we are at about the same level today, but the mix of staff has changed.
“We have been hiring throughout the difficult times while most of our competitors have been shedding staff in the client area and in the investment management and research areas. We have more people in those areas today than we had two years ago.”
Skirton said BGI was increasingly assisting UK pension funds with liability-matched strategies. He said: “We’ve delivered some innovative portfolio structures to clients that involve fixed income for liability matching, as well as SWAPs and other derivatives to help match inflation liabilities. We see more demand for that in the future.
Asked if BGI was doing ALM work for pension funds, he replied: “Consultants obviously offer those services, but for some pension plans in circumstances that make sense for the client we do offer that service occasionally. It is unusual for us to offer that service but occasionally we do. Clients are seeing the value of bringing us earlier into those conversations.“
Swiss Life also began offering asset liability matching for pension funds in 2003. However, Stephan Thaler, head of marketing and client relationship at Zurich-based Swiss Life, said the firm was not aiming to compete with consultants.
The Pension Protection Fund (PPF) is consulting on proposals to charge a "risk reflective" levy for commercial defined benefit (DB) consolidation vehicles.
The funding gap across FTSE 350 schemes could be slashed by as much as £275bn if schemes look beyond traditional ways of creating value. Victoria Ticha examines how
There will be "many flavours" of defined benefit (DB) consolidators but consolidation will only be the right answer for a minority of schemes, Alan Rubenstein says.
Work and Pensions Committee (WPC) chairman Frank Field has questioned the regulator on what lessons it can learn from the experience of the Kodak Pension Plan No.2 (KPP2).