mast image

Special Report

Impact investing

Sections

UK and Irish pooled pension funds recover from Q2

EUROPE - UK pooled pension funds returned 3% on average after posting negative returns of 4.1% earlier this year. In Ireland, the median return of pooled pension funds in the third quarter was 5.4%.

Returns for one and three years of balanced pooled funds in the UK now stand at 11.3% and 14.8% p.a., the most recent CAPS survey from the Mellon group finds.

Meanwhile, Mercer's Market Insight shows Irish pooled pension funds' median returns over one and three years of 11.9% and 14.8%.

In total, in Ireland around €8bn was invested in 18 actively managed funds and a further €6.2bn in five consensus funds, which are passively managed with variable asset allocation based on the average of active fund weightings. Mid-last year the consensus funds had attracted €2bn of investments.

"The consensus funds are becoming more common place as default option within defined contribution plans", comments Tom Geraghty, Head of Mercer Investment Consulting, Ireland.

"They could be considered quite a suitable default strategy as they are passive. Pension funds don't have this significant issue of a manager underperforming. The fund is going to give you the market return and that's it.

"Some smaller DB schemes were frustrated with active managers over the years. When they choose to implement a passive strategy they might be looking at something like consensus funds - especially smaller funds that wouldn't typically have access to international specialist managers because of their size," he tells IPE.

Looking at a one year performance it can be seen that multi-manager funds, most of which were only launched in Ireland over the last two years, are reaching the average performance mark of 11.6%.

"Multi-manager is still a very new concept to the Irish market and we still have a very small percentage of pension fund money managed on a multi-manager basis. Multi-manager is a concept that still needs to prove itself in terms of adding consistent outperformance over a longer period", Geraghty explains. 

According to Geraghty the problem with some multi-managers is that they are over-diversifying. "It is a pretty noticeable phenomenon across multi-managers that there is a danger of over-diversification. In the end they then only return the benchmark, particularly when you take the fees into account because they are higher fees.

"Multi-manager funds are another option available on the market place and to have as many options as possible is good for the marketplace. Whether or not there will be a considerable influx of money into multi-managers time will tell but it is certainly a small part of the local market."

Mercer Global Investments Europe had launched its multi-manager range of funds earlier this month.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2548

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 300-400m.
    Closing date: 2019-07-30.

  • QN-2549

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 300-700m.
    Closing date: 2019-07-30.

  • QN-2550

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2551

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2552

    Asset class: Fixed Income, High Yield (Active).
    Asset region: High Yield (US).
    Size: CHF 500-600m.
    Closing date: 2019-07-29.

  • QN-2553

    Asset class: Fixed Income, High Yield (Passive or Passive Enhanced).
    Asset region: High Yield (US).
    Size: CHF 500-1'100m.
    Closing date: 2019-07-29.

  • QN-2554

    Asset class: Global Real Estate (Equity, unlisted Funds).
    Asset region: World (ex-Switzerland).
    Size: CHF 200 mn (potential for further growth).
    Closing date: 2019-08-07.

  • QN-2556

    Asset class: FX Hedging.
    Asset region: Global.
    Size: Mandate size of CHF 1.5 bn.
    Closing date: 2019-08-09.

  • QN-2557

    Asset class: All/large Cap Equities.
    Asset region: China A-shares.
    Size: Unit linked platform (0m USD in initial investment).
    Closing date: 2019-08-01.

Begin Your Search Here
<