Unlike my friend Eddie, I am not a devotee of the conference scene. But Eddie is often to be seen making critical comments and headlines in the media. No-one is spared his criticism: asset managers, who don’t know what pension funds want; pension funds, who don’t know what they want; or the regulator, which knows what it wants but doesn’t understand what anyone else wants.
While keeping out of the line of fire, I do enjoy a good debate. I always take time to say something that others will find interesting and insightful when I speak at industry events. At a recent London conference on the future of asset management the talk was of smart beta, ETFs, disintermediation and solutions.
The panel I spoke on covered some important questions. ‘What can asset managers do to improve their proximity to clients’ needs?’ the moderator asked.
The CIO of a major investment manager stepped forward with case studies of products developed with clients. Everyone talked of the need to listen to client needs and agreed on the quality and depth of relationship with large clients who are able to articulate complex needs and engage with asset managers.
‘Developing a new strategy with major large clients allowed us to package it for smaller clients and serve a different market segment,’ the CIO said. ‘We think that is a big win-win.’
‘How can asset managers provide access to illiquid assets?’ A leading figure from one of the major consultancies took the lead on this one. ‘Unfortunately for the asset managers, the search for yield means pension funds are increasingly working together, or dealing directly with banks in non-traditional areas of credit,’ she put forward.
I discussed the working partnership with PensionKøbenhavn and how we were searching for yield. ‘My job is less of a portfolio manager and more of a project manager these days,’ a German insurance CIO said. ‘We are seeking opportunities in areas we would never have considered several years ago and are recruiting staff with a strong legal or credit analysis background.’
‘How can managers align their financial and non-financial interests?’ the moderator asked to round off the session. The head of business development at a leading US asset manager pointed out that it offered ETFs with charges of less than 10 basis points. ‘Obviously it’s about fees. And benchmark-hugging active management is yesterday’s game,’ the consultant said.
Over lunch we talked resources. ‘As a corporate pension fund, it’s hard to convince the CFO to give you an extra staff member when overall headcount is being reduced,’ I say. ‘Pension funds need to up their game in terms of in-house expertise to manage these illiquid investment projects but it’s becoming harder to do the work when you can’t afford the staff.’
Pieter Mullen is investment director at Wasserdicht Pension Funds