UK - Hewitt Bacon & Woodrow claims it is starting to win investment consulting work solely on the strength of its unconstrained mandate offering.
The consultant claims its belief that high alpha managers should be given the freedom to focus on their best ideas without any reference to traditional benchmarks is proving to be a unique selling point when pitching for business.
Hewitt investment consultant Kerrin Rosenberg said its announcement of the mandates this summer had generated “tremendous interest” from pension funds.
“We have used it in new business pitches. It has caught trustees’ attention and it is one of the main reasons they have gone ahead with us,” he said.
Pension funds can set limits on the style of investment used in these mandates, such as insisting all money is invested in equities, but in some cases such mandates have kept cash allocations as high as 80% in bear markets, or employed short selling and options.
Hewitt believes that if fund managers are allowed to back their judgement on a handful of companies then pension funds are less likely to be swept up or down in market bubbles.
Rosenberg said that such mandates needed around three years before they could be judged properly, but that Hewitt would look to monitor their progress on an annual basis.
Hewitt investment consultant Anthony Ashton added that six clients were currently using such mandates and others were in the pipeline.
He said: “These tend to be clients who are comfortable in leading the way before everybody else. They have confidence in their own active managers and want to get the best out of them.”
Rosenberg said the consultant had included unconstrained funds from fund managers Walter Scott, Orbis, and Invesco Asset Management on its buy list.
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