UK pension fund managers are maximising on their relative rather than their absolute performance in order to meet their fee structures, according to a study by the University of London's Pensions Institute.
The study questions the effect of incentives and fee structures on the cross-sectional distribution of investment performance for a large sample of UK occupational pension funds form 1986-1994. The data was provided by performance measurement service the WM Company in the UK. The study found that UK pension fund managers are set the objective of adding value but their fees are generally related to year-end asset values, not directly to performance.
By Janet Du Chenne
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