UK - At the Schroders Pension Fund Conference in London yesterday Chris Rodgers, executive director specialist UK equities, told clients that in today's environment UK pensions funds should give careful consideration to having anything up to 50% of their portfolio in specialist mandates.
Specialist fund management mandates have higher risk tolerance which allows the specialist fund management team to target higher returns - typically 2% above benchmark per annum.
The conference heard that as UK pension funds increasingly contain lower risk bond and index mandates, the inclusion of up to 50% of the portfolio in higher return specialist fund management mandates allows the fund’s assets to be sweated to generate better returns.
Chris Rodgers said: The current low inflation/ low return outlook for equities means that pension funds are looking for a bolder approach for part of their portfolio in order to achieve satisfactory returns. Our approach is to invest in stocks where we have the highest level of conviction and to take advantage of the rotational - ie swing from sector to sector - nature of a market which, in overall terms, may only be marking time.
The performance of our specialist team is significantly aided by the fact that Schroders has its own in-house primary research, so we do not have to rely on external research that is largely public and available to the market as a whole.
By Luke Clancy
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