Baillie Gifford and Montanaro are the first asset managers to sign up to a new transparency code to help the Local Government Pension Scheme (LGPS) get a better handle on investment costs.
The code, which is voluntary for managers to sign up to, was launched last week by the LGPS Scheme Advisory Board (SAB) to enable funds to get necessary data in a standardised format, after encountering difficulties in getting the data.
Managers that sign up will demonstrate their commitment to transparent cost reporting, will be listed on the SAB's website and will be able to use the logo on their marketing literature.
Since its launch the code has received increased attention from asset managers and LGPS administering authorities. A spokesperson for the SAB said at least half a dozen managers have expressed intent to sign up to the code, including BlackRock.
Councillor Roger Phillips, who is chairman of the SAB, said in a statement:
"The board is very pleased with the response from the asset management industry to the voluntary code. Both Baillie Gifford and Montanaro have already signed up, and a number of other managers, including BlackRock, have stated their intent to follow suit.
"We look forward to further engagement with asset managers and welcome their continued commitment to the scheme and their clients."
The template that underpins the code is the result of collaboration between Dr Chris Sier who has long campaigned for cost transparency, the West Midlands Pension Fund (WMPF), and the asset management trade body - the Investment Association (IA).
The template, which will show costs in pounds and pence, stems from a proposal set out in a 2015 paper written by Sier for the Financial Services Consumer Panel, which was based on the Dutch cost disclosure model.
Getting the different parties to agree on the template has been dubbed a huge achievement in clearing the path towards full transparency.
A spokesperson for Baillie Gifford said: "We believe that full cost disclosure leads to a greater understanding of the investment process, better cost management and ultimately better outcomes for investors. We are committed to minimising, wherever possible, the total costs of investment borne by our clients."
Montanaro chief executive officer Cedric Durant des Aulnois said at a time of increasing transparency, the need for full disclosure on costs is self-evident.
"We have always believed in providing our clients with total clarity when it has come to fees. Signing up to the LGPS Code is therefore a natural step for Montanaro. It is also a clear commitment to our long-standing relationships with a number of the UK's LGPS funds that have spanned more than two decades."
The IA is developing a very similar code of transparency and template, also based on Sier's proposal, for the wider sector.
Despite the code's voluntary status, many are hopeful it will be adopted by most asset managers that serve LGPS funds.
Local Government Association head of pensions Jeff Houston, who was involved in the project told PP last week that in 12 months' time any asset managers that haven't signed up to the code will face tough questions.
Some asset managers will need time to develop or change internal systems to make the data available in the required way. But Houston said that after 12 months of making ‘best efforts', they will be expected to meet the code's requirements in full.
Lowest Q3 payout since 2010
The COVID shock has amplified disruptive trends, but we see global investment opportunities in the volatility ahead.
In this live blog, Professional Pensions' sister title Investment Week collates all the breaking market news, analysis and opinion on equity, bond and currency movements as well as the impact of trade wars, tightening monetary policy and the Brexit negotiations....
London CIV and Morgan Stanley Investment Management (MSIM) have announced the launch of a global equity core fund.
Trustees need clear reporting from their investment advisers to meet their scheme's needs, says Donny Hay