There was a 12 percentage point difference in the growth portfolio performance of the best and worst performing fiduciary managers in 2019 and over a third underperformed the average diversified growth fund, research from XPS Pensions Group reveals.
The consultant's second annual FM Watch survey - which assessed the growth portfolio performance of over 99% of the fiduciary management (FM) market - also revealed markedly different asset allocation strategies across the FM market, with the strongest performers typically favouring higher equity allocations in 2019.
Commenting on the findings in the report, XPS Pensions Group head of fiduciary oversight André Kerr said: "While the risk profile of the investment strategies used by the strongest performers won't suit every scheme, we would have expected all FMs to have outperformed the average diversified growth fund given the favourable market conditions of 2019.
"Covid-19 represents the first major test for FM, as most did not provide a UK offering during the global financial crisis of 2008/09. In order for schemes to benefit over the long term from strong performance of their FM during 2019, their portfolios also need to be resilient to downside shocks to financial markets."
A quarterly update of XPS FM Watch will be published later this month, showing how the Covid-19 pandemic has impacted FM performance.
To read a copy of the annual report in full, click here.
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