Consultants survey finds $1trn available to outside managers - Fennell Betson reports
The European pension fund market at mid-1997 had assets of around the $2.9trn mark according to the William M Mercer 1998* guide to the marketplace.
This contrasts with the $2.8trn estimated in last year's guide, but the rising dollar against some European currencies will have masked the growth in assets in a number of markets. In the table of pensions assets below the results for some countries show a decline in assets, whereas, as Mercer notes, in local currency terms there has been an increase.
Though in other countries, such as France and Italy, there has been a significant reduction of what are considered to be pension fund assets. Mercer says that there is an inevitable process of refinement from year to year regarding market figures as to what should be included.
The extent to which pension assets are exposed to the marketplace and available to third party asset managers is probably even more incalculable. All in all, the consultants reckon that the $1trn handled by the 184 managers covered in the guide, who have at least one pensions mandate in Europe, is a significant proportion of the total 'available' pension fund monies".
The number of managers has in-creased by around 30 from 1997 and includes for the first time a number of continental managers, which are subsidiaries of European corporates or pension funds, such as the Schootse Poort operation of the Philips pension fund in the Netherlands with total assets of $16bn; PVF Pensionen of Stichting PVF Nederland with $15bn, and ABB Investment Management ($4bn), part of Swiss-Swe-dish group ABB Asea Brown Bov-eri.
The increasing internationalisation of the business in Europe, is captured by the guide's detailed analysis of who has what mandates where. Currently, some 102 of the 184 managers look after pension assets in at least one country outside their own, while 12.5% have mandates in five or more countries.
Among the most successful in terms of mandates in other European markets, is ABN AMRO which has mandates from 167 pension funds, of which just 67 are in the Netherlands and Dresdner's 321 are spread 207 in Germany, 71 in the UK and 43 in other countries. Similarly, of JP Morgan's 128 pension mandates, 28 are in the UK, 28 in Germany and 72 elsewhere in Europe.
The company with the greatest number of mandates (461) is Mercury, which has just nine originating non-domestically; in the case of rival UK managers, PDFM, just eight of its 377 mandates, and seven of Gartmore's 319 are outside the UK. Schroders' total comes to 414, of which 348 are in the UK and the other 66 are spread across a range of markets.
From an analysis of the incidence of mandates, Mercer considers that the Netherlands and the Belgian markets are the most open to non-domestic managers, with Germany and Switz-erland the most impenetrable. The UK seems to be becoming more open, the study finds, with 40 non-UK managers handling some 5% of UK pensions assets.
While multi-asset balanced and discretionary portfolios are by far the most common, the trend to specialist mandates continues to grow, says Mercer, both in respect of the number of managers and the number of mandates issued.
*European Pension Fund Managers Guide Volume 1 - the Marketplace 1998 is published by William M Mercer in London. Details are available from Barbara Burnett, telephone: +44 171 222 9121, fax +44 171 222 6140."