UK - An official for the London Pensions Fund Authority (LPFA) has called for pension funds in the UK to re-establish control of their investment process.
LPFA assistant investment manager Paul Kessell said: “Following a period characterised by the move to outsource many aspects of the investment procedure, I felt it was best achieved by pension funds developing a conceptual investment framework to form the basis for its investment philosophy.
“Certainly the CalPERS’ and CalSTRS’ of this world and the Scandinavian funds are moving to or have strong in-house resources. They have been performing well and have more control over the investment environment.”
Kessell said the key features of his proposal revolved around the development of a strong in-house capability and a “free flow” of ideas.
He said funds should heed advice from external advisors to support, rather than manage, the investment process, and that they should set-out in-house decision making processes between management and trustees.
“With the Myners principles coming into play, there’s a greater burden for funds to meet compliance requirements imposed and therefore there’s more outsourcing to get third party measurement services to provide information that supports the requirements.
“If you have the the intellectual capital and technological resources in-house you then have the ability to provide a vigorous review of the externally sourced information that’s coming in,” he said.
This week's edition of Professional Pensions is out now.
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